Simplified  Bookkeeping 


Simplified  Bookkeeping 


BY 


G.  LAWRENCE  HOFFMAN 

ACCOUNTANT  AND  HEAD  OF  COMMERCIAL  DEPARTMENT  OF 
McKEESPORT  HIGH  SCHOOL 


Script  Work  by  H.  A.  Roush 


G.    LAWRENCE   HOFFMAN   CO.,    Publishers 


COPYRIGHT,  1916, 
BY  G.  LAWRENCE  HOFFMAN 


COPYRIGHT,  CANADA,  1916. 
BY  G.  LAWRENCE  HOFFMAN 


PREFACE 

It  has  been  my  opportunity  as  a  teacher  and  accountant  for  the  past  ten  years,  to  make 
a  personal  study  of  the  bookkeeping  situation  in  general,  to  observe  the  defects  in  prepara- 
tion shown  by  the  average  bookkeeper,  to  investigate  the  causes  of  these  defects,  and  lastly 
to  seek  to  remedy  them.  As  a  rule  I  have  found  the  student,  after  pursuing  the  study  of 
bookkeeping  for  from  five  to  six  months  and  in  hundreds  of  cases  a  much  longer  period,  im- 
mature in  his  knowledge,  with  no  definite  information  on  the  subject  and  so  crammed  with 
a  conglomeration  of  rules  and  theories  and  ambiguous  explanations  that  he  is  unable  to 
make  practical  use  of  them.  He  is  quite  unprepared  to  meet  the  every  day  transactions  of 
actual  business  and  must  undergo  a  protracted  period  of  what  might  well  be  termed  appren- 
tices'hip  before  he  actually  becomes  a  competent  bookkeeper. 

The  cause  of  this  condition  as  evidenced  by  the  statements  of  commercial  teachers  and 
former  students  and  corroborated  in  my  own  experience,  lies  in  the  bookkeeping  texts  them- 
selves. The  main  trouble  with  these  texts  lies  in  the  fact  that  the  student  is  not  taught  to 
think  for  himself.  No  attempt  is  made  to  explain  logically  the  disposition  of  the  various 
kinds  of  transactions  and  the  student  is  expected  to  master  the  subject  merely  by  memoriz- 
ing and  imitating  the  work  set  forth  in  the  text.  It  is  little  wonder,  considering  how  com- 
plicated and  how  filled  with  superfluous  matter  these  works  are,  that  the  average  mind  is 
unable  to  grasp  and  retain  those  points  which  are  truly  essential. 

Dissatisfied  with  existing  bookkeeping  texts,  I  wrote  Simplified  Bookkeeping  in  order  to 
meet  the  needs  of  my  classes.  Originally,  my  intention  was  to  write  merely  for  use  in  my 
own  work  but  so  successful  have  my  methods  proved,  that  I  have  been  induced  to  put  them 
in  book  form.  The  ideas  embodied  in  Simplified  Bookkeeping  are  thus  not  experimental 
but  the  proved  results  of  my  experience  both  as  a  teacher  and  an  accountant. 

SOME  OF  THE  SALIENT  FEATURES  OF  SIMPLIFIED  BOOKKEEPING 

1.  One  simple  rule  of  not  more  than  fifteen  words,  which  can  be  learned  in  ten  min- 
utes, decides  and  disposes  of  every  different  kind  of  transaction.  This  eliminates  weeks 
and  months  of  useless  memorizing  and  at  the  same  time  gives  the  student  something  of  in- 
finitely greater  value;  for  by  means  of  this  rule  he  is  prepared  for  any  kind  of  transaction 
w'hich  may  arise. 

2.  It  can  be  mastered  by  any  person  of  average  intelligence  in  forty  hours,  without 
any  assistance  and  in  such  a  practical  manner  that  the  student  can  actually  and  intelligently 
keep  books. 

3.  All  books  including  the  Journal,  Purchase,  Sales,  Cash,  Notes  Payable  and  Notes 
Receivable  books  are  used  from  the  very  beginning.  They  are  scientifically  explained, 
thoroughly  illustrated,  and  their  use  clearly  defined. 

4.  Drafts  receive  an  entirely  new  and  distinct  method  of  treatment  which  enables  the 
student  to  master  the  subject  in  from  one  to  two  hours. 

5.  Notes,  like  drafts,  are  specially  treated  making  them  easily  understood. 

6.  Interest,  Discount  and  Merchandise  Discount  are  defined  and  treated  under  new  and 
simple  methods. 


343629 


7.  Absolutely  every  different  point  is  individually  illustrated,  giving-  the  student  the 
opportunity  of  visualizing  every  detail  of  the  work  in  addition  to  his  knowledge  received 
through  the  written  explanations.  Individual  illustrations  remove  every  chance  of  ambiguity 
and  make  an  easy  and  handy  reference  for  entries,  etc. 

8.  Posting  for  the  first  time  is  given  an  important  place.  It  is  thoroughly  explained 
from  an  entirely  new  angle  and  in  such  a  way  that  posting  becomes  a  matter  of  absolute  ac- 
curacy instead  of  a  doubtful  procedure. 

9.  The  trial  balance  is  clearly  and  progressively  treated  from  its  simplest  form.  A  short 
cut  trial  balance  is  introduced  which  retains  all  of  the  information  of  other  trial  balances 
but  consumes  less  time  in  constructing. 

10.  The  balance  sheet  is  logically  and  scientifically  developed.  Each  step  is  pointed 
out  and  carefully  expounded. 

11.  Every  different  kind  of  account  is  thoroughly  explained  so  that  the  student  is  able 
to  decide  instantly  under  what  class  an  account  should  be  placed. 

12.  The  subject  of  account  closing  receives  special  attention  so  that  there  will  be  no 
doubt  as  to  how  to  close  accounts  having  no  inventory  (both  financial  and  working  ac- 
counts) ;  how  to  close  accounts  'having  a  resource  inventory ;  how  to  close  accounts  hav- 
ing a  liability  inventory;  how  to  close  accounts  having  both  resource  and  liability  inven- 
tories. 

13.  The  creating,  developing  and  disposing  of  the  loss  and  gain  account,  a  subject 
never  thoroughly  presented  or  understood,  is  scientifically  handled. 

14.  The  several  different  rulings  are  illustrated  and  explanations  concerning  their  use 
set  forth. 

15.  The  different  transactions  have  been  taken  from  actual  business,  so  that  the  stud- 
ent is  prepared  to  meet  the  problems  which  will  confront  him  in  the  business  world. 

16.  The  book  is  so  arranged  that  it  makes  a  handy  reference  in  cases  of  immediate  need. 

17.  A  complete  and  accurate  set  of  books  may  be  constructed  by  taking  the  transactions 
from  any  text  or  work  and  applying  to  them  the  rule,  instructions,  etc.,  set  forth  in  Simpli- 
fied Bookkeeping. 

THE  AUTHOR. 


SIMPLIFIED  BOOKKEEPING 


1.  Bookkeeping: — The  recording  of  business  transactions  according  to  prescribed  rules 

and  principles. 

2.  Business  Transaction: — The  exchanging  of  values  between  two  or  more  parties. 

3.  Kinds  of  Business  Transactions: — (a)  Complete — where  the  values  are  exchanged 
by  both  parties  at  the  same  time,  (b)  Incomplete — where  the  value  is  given  by  one  party 
and  its  equivalent  value  not  received  until  some  future  time. 

4.  Object : — To  show  the  cost  of  purchases,  the  return  from  sales,  the  loss  or  gain,  the 
resources  and  liabilities,  and  the  present  worth  of  the  business. 

5.  Kinds: — (a)  Single  Entry — the  keeping  of  personal  accounts  only.  (b)  Double 
Entry — the  keeping  of  personal,  property,  and  expense  accounts. 

6.  A  Debtor: — One  who  has  received  value,  and  has  made  no  equivalent  return. 

7-     A  Creditor: — One  who  has  given  value,  and  has  received  no  equivalent  return. 

8.  A  Debit: — ^The  value  or  debt  which  is  owed  by  the  debtor. 

9.  A  Credit: — The  value  or  credit  which   is  owed  to  the  creditor. 

10.  An  Account: — The  grouping  together  of  all  debits  and  all  credits  which  affect  a 
particular  person,  firm,  corporation  or  thing,  and  placing  them  under  their  proper  title. 

11.  Kinds  of  Accounts: — (a)  Personal — one  which  affects  a  person,  firm  or  corporation. 
(b)  Property — one  which  aflfccts  that  which  is  purchased  to  be  sold.  (c)  Expense — one 
which  aflFects  that  which  is  purchased  to  be  used  in  carrying  on  the  business,  and  not  for 
the  purpose  of  selling. 

Note: — The  property  account  will  be  known  as  Merchandise.  This  account  may  be 
subdivided. 

Example  of  Subdivided  Merchandise  Account: — A  firm  may  be  dealing  in  feed  and  coal. 
It  would  be  more  convenient  under  such  conditions  to  keep  separate  merchandise  accounts 
known  as  Feed  account  and  Coal  account.  The  Merchandise  account  may  be  further  divid- 
ed into  a  Purchase  account  and  into  a  Sale  account.  This  further  division  is  made  for  the 
purpose  of  showing  the  True  amount  of  Net  Purchases  and  Net  Sales. 

Note: — The  Expense  account  affects  such  things  as  rent,  stamps,  fuel,  light,  heat,  clerk 
hire,  etc.    This  account  may  be  subdivided. 

Example  of  Subdivided  Expense  Account: — It  is  preferable,  where  more  detailed  work 
is  required,  to  open  special  accounts  with  such  items  as  rent,  light,  fuel,  etc.  These  special 
accounts  will  be  known  as  Rent  account.  Light  and  Fuel  account,  etc. 

12.  RULE  FOR  DETERMINING  WHETHER  AN  ITEM  SHALL  BE  DEBITED 
OR  CREDITED:— THE  RESULT  OF  A  SERVICE  IS  DEBITED  AND  THE  SERV- 
ICE ITSELF  IS  CREDITED. 

Note: — Every  transaction  consists  of  a  service  and  a  result. 

Important.  Always  apply  the  rule  from  the  point  of  view  of  the  Business  in  which  you 
are  engaged   or  in  which  you  are  about  to  engage. 

Important.  Before  applying  the  rule  for  debit  and  credit,  ascertain  what  the  thing  which 
is  received  and  the  thing  which  is  given,  are,  that  is,  whether  they  come  under  the  headings 
of  merchandise,  expense,  cash,  or  personal  accounts,  etc.  After  this  has  been  ascertained, 
apply  the   rule  calling  these  things   by   their  proper  names. 


Application  of  the  Rule  for  Debiting  and  Crediting 


13.  I  begin  business  by  investing  the  following: — Merchandise,  Cash,  Horse  and 
Wagon,  and  Real  Estate. 

I  perform  the  service  for  the  business  in  that  I  bring  into  it  the  merchandise,  cash, 
horse  and  wagon,  and  real  estate;  therefore  the  merchandise,  cash,  horse  and  wagon,  and 
real  estate  are  the  results  to  the  business.  According  to  the  rule,  the  service  is  credited. 
Since  the  service  is  credited  and  since  I  performed  the  service,  it  must  follow  that  I  must 
be  credited.  Again,  according  to  the  rule,  the  result  is  debited.  Since  the  result  is  debited 
and  since  merchandise,  cash,  horse  and  wagon,  and  real  estate  are  the  results,  it  must  follow 
that  they  must  be  debited.     For  entries  see  illustration  No.  1. 


Illustration  No.   1. 


Journal 


C'Pc'C-^. 


L.  F. 


-MJ2^- 


Cash 


DEBIT    SIDE 


C^^C.^£^^-^^ /_ ^</^(  ^^/^IS^^^^. 


i ^-^r^^-'tSl.-ff^-.jr^^ 


d 


^<?  «7  o 


PURCHASE  Book 


C'/r^C. 


>g^g.^ 


/ 


L.  F 


i:^ 


&i?i:<^:23;Z-&< 


^Zi=.^^tf*!4i«<^«4^a!i£^l^ 


/.^^/g 


14.     I  buy  merchandise  on  account  from  Adam  Wise. 

Note : — On  account  means  that  the  equivalent  value  was  not  given  for  the  merchandise 
at  the  time  of  purchase. 

Adam  Wise  performs  the  service  in  that  he  brings  into  my  business  merchandise, 
therefore  the  merchandise  is  the  result.  According  to  the  rule,  the  service  is  credited. 
Since  the  service  is  credited  and  since  Adam  Wise  performed  the  service,  it  must  follow 
that  Adam  Wise  must  be  credited.  Again,  according  to  the  rule,  the  result  is  debited. 
Since  the  result  is  debited,  and  since  merchandise  is  the  result,  it  must  follow  that  merchan- 
dise must  be  debited.      For  entry  see  illustration  No.  2. 


Illustration  No.   2. 


Purchase  Book 


^:</^<<^- 


VAr/yf- 


^^/ 


/.? 


15.     I  buy  merchandise  for  spot  cash. 

Note: — For  Spot  Cash  means  that  the  money  is  paid  for  the  merchandise  at  the  time 
of  purchase. 

The  cash  performs  the  service  in  that  it  brings  into  my  business  merchandise,  there- 
fore the  merchandise  is  the  result.  According  to  the  rule  the  service  is  credited.  Since 
the  service  is  credited,  and  since  cash  has  performed  the  service,  it  must  follow  that  cash 
must  be  credited.     Again,  according  to  the  rule,^  the  result  is  debited.     Since  the  result  is 


debited,  and  since  merchandise  is  the  result,  it  must  follow  that  merchandise  must  be  de- 
bited.    For  entry  see  illustration  No.  3. 


Illustration   No.    3. 


PURCHASE  Book 


::^^S:=^^a^3»=L^2-e«.i<^ 


j^\^o 


Note: — A    check    mark    indicates   that   the    item    opposite   It   is   not   posted   to  the   ledger. 

Cash  credit  side 


"y^^P^-r-^-^^-T^i-^X^Ci^r^ly 


Xfrj-Q 


Note: — It  should  be  remembered  that  wherever  a  check  mark  appears  the  item  opposite  it  is  never  posted 
to  the  ledger.  The  thing  to  be  debited  or  credited  always  receives  its  debit  or  credit  in  the  posting  of  the  sum 
total  of  the  book  in  which  It  appears.  This  is  true  except  in  the  case  of  the  cash  book  when  the  cash  bal- 
ance will   show  the   debit  or  credit. 


16.     I  buy  merchandise  for  a  note. 

Note: — For  a  Note  means  that  at  the  time  the  merchandise  is  purchased  a  note  is  given. 
Definition  of  a  Note.     An  unconditional  written  promise  made  by  one  party  to  another 
to  pay  him  or  to  his  order  or  bearer  a  certain  sum  of  money  at  a  definite  time. 
For  form  of  note  see  illustration  No.  4. 

Illustration  No.    4. 


McKeesport,  Pa 

a^f^p^  da/e bz(2.. 


c^,19 


■Atfo^miAe  /b  Aoai,  ^  *^ 


t/tr    o'tef/e'T    o/. 


j\/o.. / Qjct^t 


.::k,./f- 


Notes  are  divided  into  two  general  classes — Notes  Payable  and  Notes  Receivable. 

A  Note  Payable: — A  note  becomes  a  Note  Payable  to  the  party  issuing  it  or  to  the 
party  who  has  to  pay  it. 

A  Note  Receivable: — A  note  becomes  a  Note  Receivable  to  the  party  who  receives  it 
or  to  the  party  who  collects  the  money  on  it  and  does  not  eventually  have  to  pay  the  note. 

In  the  case  I  buy  merchandise  for  a  note,  the  note  becomes  a  Note  Payable  to  me,  as  I 
have  issued  it  and  will  have  to  pay  it. 

In  this  case  the  Note  Payable  performs  the  service  in  that  it  brings  merchandise  into  my 
business,  therefore  the  merchandise  is  the  result.  According  to  the  rule  the  service  is  cred- 
ited. Since  the  service  is  credited  and  since  the  Note  Payable  performed  the  service  it  must 
follow  that  Note  Payable  must  be  credited.  Again,  according  to  the  rule,  the  result  is  deb- 
ited. Since  the  result  is  debited  and  since  merchandise  is  the  result,  it  must  follow  that 
merchandise  must  be  debited.    For  entry  see  illustration  No.  5. 


Illustration  No.   5. 


Purchase  Book 


^ 


UC^ 


>3l 


j^ 


Cc!t:^<-tf'**e'^^g^^^.,<w>^»i^ 


</.1  /^f- 


±  /a 


^t^ 


Note: — No  account  Is  kept  with  Edw.  Jackson.  The  check  mark  In  the  folio  columns  of  the  Purchase  Book 
and  Notes  Payable  Book  Indicate  that  Jackson's  account  is  not  to  be  posted.  The  Note  Payable  will  receive  its 
credit  in  the  sum  total  of  the  Amount  column  of  the  Notes  Payable  Book  posted  to  the  credit  side  of  the 
Notes  Payable  account  In  the  ledger.  The  merchandise  will  receive  its  debit  in  the  sum  total  of  the  merchandise 
of  the  Purchase   Book  posted  to  the   debit  side  of  the    Merchandise    account    in    the    ledger. 


Notes 


DRAWER  (draft) 

OR 
ENDORSER  (noTe) 


Payable 

DATE 

TIME 

WHEN  DUE                                   j 

AMOUNT 

DISPOSITION 

VEAR 

MONTH 

DAY 

TIi& 

Ju. 

Feb. 

Mar. 

4pr. 

M»7 

Jane 

July 

Aug. 

S<pt 

Oct. 

Hoy. 

D«e. 

AMOUNT 

DATE 

REMARKS 

y^' 

Or. 

rf 

S^a^ 

/f- 

?, 

• 

2^/0 

■fy't 

._ 

17.     I  sell  merchandise  on  account  to  B.  C.  Wells. 

Merchandise  performs  the  service  in  that  it  brings  into  my  business  the  account  of 
B.  C.  Wells,  therefore  B.  C.  Well's  account  is  the  result.  According  to  the  rule  the  serv- 
ice is  credited.  Since  the  service  is  credited,  and  since  merchandise  has  performed  the  serv- 
ice, it  must  follow  that  merchandise  must  be  credited.  Again,  according  to  the  rule,  the  re- 
sult is  debited.  Since  the  result  is  debited,  and  since  B.  C.  Well's  account  is  the  result,  it 
must  follow^  that  B.  C.  Well's  account  must    be  debited.    For  entry  see  illustration  No.  6- 


Illustration   No.    6. 


Sales  Book 


d^^^e^ 


tff—      L.  F. 


2^^s^^^^ 


;r.r#  O -;^^jK^..^i^ 


-^^-^^ 


^  / 


^  / 


'^f^ 


@/     .^.if^^ 


^  •?— tJ«l.^-f-r  /-^^•t/-^  "^T^ 


■^^ 


iSi  /  o 


2.f  /Q 


18.     I  sell  merchandise  for  spot  Cash. 

Merchandise  performs  the  service  in  that  it  brings  into  my  business  cash,  therefore 
cash  is  the  result.  According  to  the  rule  the  service  is  credited.  Since  the  service  is  credit- 
ed, and  since  merchandise  has  performed  the  service  it  must  follovv^  that  merchandise  must 
be  credited.    Again,  according  to  the  rule,  the  result  is  debited.    Since  the  result  is  debited, 


and  since  cash  is  the  result,  it  must  follow  that  cash  must  be  debited.     For  entry  see  illu- 
stration No.  7. 


Illustration   No.    7. 


Sales  Book 


U^ieCa 


grtS^l^ 


-;^^^/^^>f^^.^Cy ^Ll^yt^ 


e--^^--*^*^  •^■^  '<^^<*r^^i:^.^<^^^ 


/ei'-^L^^'^ .(^^^  /  — ea^^^^S-gg^^^at:^ 


^,     <i3^ 


— ^r^.><g^  ct^ 


/^^^^^^^. 


-^ 


y^ 


^ 


^.-r 


/  ^ 


/  2-  ^^SLyj^^j'^  ^->^^^^>t^/ (^ z^ /L 


.^4A^ 


jlm  a  / 


Cash 


Cf!!^!^€^ 


^        Cr"^^  yj/^^  ^^l^^  -r'-Kt^t^^^y^f-f^^Y-^..,^^ 


DEBIT    SIDE 


U^ 


a  / 


19.     I  sell  merchandise  for  a  note. 

Note : — The  note  in  this  case  is  a  Note  Receivable  as  it  comes  into  my  business.  Also, 
I  can  collect  the  money  on  this  note  and  will  not  have  to  eventually  pay  the  note. 

The  merchandise  performs  the  service  in  that  it  brings  a  Note  Receivable  into  my  busi- 
ness, therefore  the  Note  Receivable  is  the  result.  According  to  the  rule,  the  service  is 
credited.  Since  the  service  is  credited,  and  since  the  merchandise  has  performed  the  service, 
it  must  follow  that  merchandise  must  be  credited.  Again,  according  to  the  rule,  the  result  is 
debited.  Since  the  result  is  debited,  and  since  Note  Receivable  is  the  result,  it  must  follow 
that  Note  Receivable  must  be  debited.    For  entry  see  illustration  No.  8. 


Illustration  No.   8. 


Sales  Book 


^J^;^^7^  yi4r,^:^-^^J'^^,  J^   y^/^^^^-t^^. 


— 1^'/,-r^^rfVi*g-i»^^i-?<!^/trf'  \ 


^— ^/ 


Notes 


WHEN 
RECEIVED 


DRAWER  (draft) 
OR 

end6rser  (note) 


IN  WHOSE  FAVOR 

(payee) 


DRAWEE  (draft) 
OR 
MAKER  (note) 


FOR  WHAT 
RECEIVED 


WHERE  PAYABLE 


^ 


^^ 


.  ^/S^^'^Xif^-zi^^i^^rt. 


■fe  >*^>?'v<'P^^i)a^^^  '^.^n.,*^  ^Ar // f 


'^^-*-'^>^-^-'-—  j^^J^^XX»^ 


Receivable 

DATE 

TIME 

WHEN  DUE 

L  F. 

AMOUNT 

DISPOSITION 

VEAH 

MONTH 

OAV 

TEIR 

Jan. 

Feb. 

Mar. 

Apr. 

M»J 

Jane 

Jaly  iag.|sept 

Oct. 

Hot. 

Dee. 

AMOUNT 

DATE 

REMARKS 

/■f- 

(^t,<y^ 

r-r 

xiA^ 

V^- 

V 

1 

)/ 

_t^x£<^7 

20.  I  pay  Adam  Wise  for  the  merchandise  bought  from  him  sometime  ago.  (See  para- 
graph 14  for  original  transaction.) 

Cash  performs  the  service  in  that  it  liquidates  or  closes  Adam  Wise's  account,  therefore 
the  closing  of  Adam  Wise's  account  is  the  result.  According  to  the  rule  the  service  is 
credited.  Since  the  service  is  credited,  and  since  cash  has  performed  the  service,  it  must 
follow  that  cash  must  be  credited.  Again,  according  to  the  rule,  the  result  is  debited. 
Since  the  result  is  debited,  and  since  the  liquidation  of  closing  of  Adam  Wise's  account  is 
the  result,  it  must  follow  that  Adam  Wise's  account  must  be  debited.  For  entry  see  illu- 
stration No.  9. 


Illustration   No.    9. 


Cash 


CREDIT  SIDE 


£^i^ 


^^- 


^/jH  P-  /y^- 


i-^  / 


/«/ 


21.  I  pay  my  note  which  I  gave  for  merchandise  sometime  ago.  (See  paragraph  16 
for  original  transaction.) 

Note: — When  a  note  is  paid,  it  is  returned  to  the  payer  cancelled  or  receipted. 

Note: — If  T  am  paying  this  note  it  must  be  a  Note  Payable  to  me. 

Cash  performs  the  service  in  that  it  brings  into  my  business  my  cancelled  or  receipted 
note  or  Note  Payable,  therefore  Note  Payable  is  the  result.  According  to  the  rule  the 
service  is  credited.  Since  the  service  is  credited,  and  since  cash  has  performed  the  service, 
it  must  follow  that  cash  must  be  credited.  Again,  according  to  the  rule,  the  result  is 
debited.  Since  the  result  is  debited,  and  since  the  Note  Payable  is  the  result,  it  must  follow 
that  Note  Payable  must  be  debited.   For  entry  see  illustration  No.  10. 


Illustration  No.  10. 


Cash 


CREDIT  SIDE 


r-ra^^/^ 


-4£- 


.^'i^-i^-.^^.^^^^^^^ti^ia-'g^^ 


X  /<? 


AiT 


22.  I  receive  cash  from  B.  C.  Wells  for  the  merchandise  sold  him  some  time  ago.  (See 
paragraph  17  for  original  transaction.) 

B.  C.  Wells  performs  the  service  in  that  he  brings  into  my  business  cash,  which  liqui- 
dates or  closes  his  account  on  my  books,  therefore  cash  is  the  result.  According  to  the 
rule,  the  service  is  credited.  Since  the  service  is  credited,  and  since  B.  C.  Wells  has  perform- 
ed the  service,  it  must  follow  that  B.  C.  Wells  must  be  credited.  Again,  according  to  the 
rule,  the  result  is  debited.  Since  the  result  is  debited,  and  since  cash  is  the  result,  it  must 
follow  that  cash  must  be  debited.    For  entry  see  illustration  No.  11. 


Illustration    No.    11. 


Cash 


DEBIT    SIDE 


^^ 


.-^J^L^M^^^if.^ 


r/y/^f- 


-^^  v^ 


23.  I  collect  the  money  for  the  note  which  I  received  sometime  ago  for  merchandise. 
(See   paragraph   19   for  original  transaction.) 

Note: — When  a  note  is  paid,  the  party  receiving  the  money  cancells  or  receipts  the  note 
and  returns  it  to  the  payer. 

Note: — If  I  am  collecting  the  money  on  this  note  it  must  be  a  Note  Receivable  to  me. 

The  Note  Receivable  performs  the  service  in  that  it  brings  cash  into  my  business,  there- 
fore cash  is  the  result.  According  to  the  rule,  the  service  is  credited-  Since  the  service  is  credit- 
ed, and  since  the  Note  Receivable  has  performed  the  service,  it  must  follow  that  Note  Re- 
ceivable must  be  credited.  Again,  according  to  the  rule,  the  result  is  debited.  Since  the 
result  is  debited,  and  since  cash  is  the  result,  it  must  follow  that  cash  must  be  debited. 
For  entry  see  illustration  No.  12. 


Illustration  No.    12. 


Cash 


DEBIT    SIDE 


24.  I  pay  my  bill,  due  James  Hecker,  for  merchandise,  which  I  purchased  from  him 
sometime  ago.  For  paying  the  bill  at  this  time  he  allows  me  a  discount.  (The  original 
transaction  for  this  is  similar  to  the   one  in  paragraph  14.) 

Definition  for  Merchandise  Discount: — A  certain  percentage  on  each  dollar  or  fraction 
thereof  allowed  to  the  purchaser  for  paying  his  bills  within  a  certain  time.  Of  course  this 
discount  is  allowed  by  the  seller. 

IMPORTANT.  The  presumption  is  that  the  purchaser  pays  to  the  seller  the  full  amount 
of  the  bill  on  which  he  is  to  be  allowed  a  merchandise  discount  and  that  the  seller  then  re- 
turns to  the  purchaser  the  amount  of  the  merchandise  discount.  This  makes  two  transac- 
tions or  two  debits  and  two  credits. 

First  transaction.  I  pay  my  bill,  due  James  Hecker,  for  merchandise  which  I  purchased 
from  him  sometime  ago. 

Cash  performs  the  service  in  that  it  liquidates  or  closes  James  Hecker's  account  on  my 
books,  therefore  James  Hecker's  account  is  the  result.  According  to  the  rule,  the  service  is 
credited.  Since  the  service  is  credited,  and  since  cash  has  performed  the  service,  it  must 
follow  that  cash  must  be  credited.  Again,  according  to  the  rule,  the  result  is  debited.  Since 
the  result  is  debited,  and  since  the  closing  of  James  Hecker's  account  is  the  result,  it  must 
follow  that  James  Hecker's  account  must  be  debited.     For  entry  see  illustration  No.  13. 


Illustration  No.   13. 


Cash 


CREDIT  SIDE 


Second  transaction.     For  paying  the  bill  at  this  time  James  Hecker  allows  me  a  dis-- 
count. 

Remember  the  presumption  is  that  the  full  amount  of  the  bill  is  paid  by  the  purchaser 
after  which  the  seller  returns  to  him  the  amount  of  the  Merchandise  Discount. 

Merchandise  Discount  performs  the  service  in  that  it  brings  into  my  business  cash, 
(had  it  not  been  for  Merchandise  discount  I  would  not  have  received  this  cash)  therefore  cash 
is  the  result.  According  to  the  rule,  the  service  is  credited.  Since  the  service  is  credited,  and 
since  Merchandise  Discount  has  performed  the  service,  it  must  follow  that  Merchandise  Dis- 
count must  be  credited.  Again,  according  to  the  rule,  the  result  is  debited.  Since  the  re- 
sult is  debited,  and  since  cash  is  the  result,  it  must  follow  that  cash  must  be  debited.  For 
entry  see  illustration  No.  14. 


Illustration  No.  14. 


/^^.^t^. 


L.  F 


Cash 


DEBIT  SIDE 


y^^^^^^^ ^^m^ ^^..i^^^<^^  J/L^-:!^!:^^^.^  kj^^ */.,  /.^. 


^^  ^ 


25.  John  Watson  pays  me  for  merchandise  which  I  sold  him  sometime  ago.  I  allow 
him  a  discount. 

First  transaction.  John  Watson  pays  me  for  merchandise  which  I  sold  him  sometime 
ago. 

John  Watson  performs  the  service  in  that  he  brings  into  my  business  cash,  which  liqui- 
dates or  closes  his  account  on  my  books,  therefore  cash  is  the  result.  According  to  the  rule, 
the  service  is  credited.  Since  the  service  is  credited,  and  since  John  Watson  has  perform- 
ed the  service,  it  must  follow  that  John  Watson  must  be  credited.  Again,  according  to  the 
rule,  the  result  is  debited.  Since  the  result  is  debited,  and  since  cash  is  the  result,  it  must 
follow  that  cash  must  be  debited.    For  entry  see  illustration  No.  15. 


Illustration  No.  15. 


Cash 


DEBIT    SIDE 


^^^ 


L.  F 


-^^7^..,»-r,^^ 


<^///^- 


X  /^ 


^^ 


Second  transaction.    I  allow  John  Watson  a  discount. 

Note: — If  I  allow  John  Watson  a  discount,  then  cash  goes  out  of  my  business  and  it  re- 
sults in  discharging  my  obligation  known  as  Merchandise  Discount. 

Cash  performs  the  service  in  that  it  discharges  my  obligation  known  as  Merchandise  Dis- 
count, therefore  Merchandise  Discount  is  the  result.  (Had  it  not  been  for  Merchandise  Dis- 
count I  would  not  have  had  to  pay  out  cash.)  According  to  the  rule  the  service  is  credited. 
Since  the  service  is  credited,  and  since  cash  has  performed  the  service  it  must  follow  that  cash 
must  be  credited.  Again,  according  to  the  rule,  the  result  is  debited.  Since  the  result  is 
debited,  and  since  Merchandise  Discount  is  the  result,  it  must  follow  that  Merchandise  Dis- 
count must  be  debited.     For  entry  see  illustration  No.  16. 


Illustration  No.  16. 


Cash 


CREDIT  SIDE 


^ 


y^- 


-^ 


L.  F. 


^^^ai^.^^^/^^ 


-  J^^-7^^y^a.^^C.,frt^\,(^,^  ^s/fj  : ^ 


^^^ 


26.     I  discount  my  note  issued  for  merchandise  sometime  ago. 

Note: — The  original   transaction   of  this  case  is  similar  to  the  case  in  paragraph   16- 

Definition  of  Discount  from  the  PAYER'S  view  point : — A  sum  of  money  allowed  to  the 
payer  of  a  negotiable  instrument  (note,  draft,  etc.)  for  paying  it  before  it  is  due. 

Important.  The  presumption  is  that  the  payer  pays  the  full  amount  ot  his  instrument 
after  which  there  is  returned  to  him  the  amount  of  the  discount. 

Note: — The  instrument  is  receipted  or  cancelled  and  returned  to  the  payer  by  the  re- 
ceiver or  holder,  at  the  time  of  payment. 

First  transaction.     I  pay  my  note. 

Cash  performs  the  service  for  me  in  that  it  brings  into  my  business  my  Note  Payable 
(cancelled  or  receipted),  therefore  Note  Payable  is  the  result.  According  to  the  rule  the 
service  is  credited.  Since  the  service  is  credited,  and  since  cash  has  performed  the  service, 
it  must  follow  that  cash  must  be  credited.    Again,  according  to  the  rule,  the  result  is  debit- 


10 


ed.    Since  the  result  is  debited,  and  since  Note  Payable  is  the  result,  it  must  follow  that  Note 
Payable  must  be  debited.    For  entry  see  illustration  No.  17. 


Illustration  No.  17. 


Cash 


CREDIT  SIDE 


C'fC*'^^ 


L.  F. 
/  2. 


^^^^^^^.^/^^^-y^^*^*^-^ 


^^S^Ltft^:^^^ 


.^  a  a 


\ 

Second  transaction.    I  receive  the  amount  of  the  discount  in  cash. 

Discount  performs  the  service  in  that  it  brings  into  my  business  cash.  (Had  it  not 
been  for  Discount  we  would  not  have  received  this  cash),  therefore  Cash  is  the  result.  Ac- 
cording to  the  rule,  the  service  is  credited.  Since  the  service  is  credited,  and  since  Dis- 
count has  performed  the  service,  it  must  follow  that  Discount  must  be  credited.  Again, 
according  to  the  rule,  the  result  is  debited.  Since  the  result  is  debited,  and  since  cash  is 
the  result,  it  must  follow  that  cash  must  be  debited.    For  entry  see  illustration  No.  18. 


Illustration  No.   18. 


Cash 


DEBIT    SIDE 


u^^^*<^. 


Vf- 


A^2^ 


by^*^^^      P^  ^/y:Zr^^^^y^  C4L-.rr^-f^  ''^^^*'^-^''^^'^'-*^^ 


Jljl. 


27.     I  have  a  note,  which  I  received  for  merchandise   sold  sometime  ago,   discounted. 

Definition  of  Discount  from  the  RECEIVER'S  or  HOLDER'S  view  point:— A  sum  of 

money  allowed  by  the  receiver  or  holder  of  a  negotiable  instrument   (note,  draft,  etc.)    for 
the  privilege  of  collecting  it  before  it  is  due. 

Important.  The  presumption  is  that  the  receiver  or  holder  collects  the  full  amount  of 
the   instrument   after  which   he   returns  the   amount  of  the  discount. 

Remember  that  the  instrument  is  receipted  or  cancelled  by  the  receiver  or  holder  at  the 
time  of  collection,  and  returned  to  the  payer.' 

First  transaction.    I  collect  the  money  on  a  note. 

Note  Receivable  performs  the  service  in  that  it  brings  into  my  business  cash,  therefore 
cash  is  the  result.  According  to  the  rule,  the  service  is  credited.  Since  the  service  is  cred- 
ited, and  since  Note  Receivable  has  performed  the  service,  it  must  follow  that  Note  Re- 
ceivable must  be  credited.  Again,  according  to  the  rule,  the  result  is  debited.  Since  the  re- 
sult is  debited,  and  since  cash  is  the  result,  it  must  follow  that  cash  must  be  debited.  For 
entry  see  illustration  No.  19. 


Illustration   No.    19. 


Cash 


DEBIT    SIDE 


L.  F. 


/^^^^^.,^^^c,£t<^i.*-^t.^^e^ 


^^^3'^^^^^t,<^^^.*^.<^^. 


^/f  7-^ 


Second  transaction.    I  pay  the  amount  of  the  discount  in  cash. 

Note: — If  I  pay  the  amount  of  the  discount,  then  cash  goes  out  of  my  business  and 
it  results  in  discharging  my  obligation  known  as  Discount. 

Cash  performs  the  service  in  that  it  discharges  my  obligation  known  as  Discount, 
therefore  Discount  is  the  result.  According  to  the  rule,  the  service  is  credited.  Since  the 
service  is  credited,  and  since  cash  has  performed  the  service,  it  must  follow  that  cash 
must  be  credited.    Again,  according  to  the  rule,  the  result  is  debited.     Since  the  result  is 


U 


debited  and  since  Discount  is  the  result,  it  must   follow  that   Discount  must  be  debited. 
For  entry  see  Illustration  No.  20. 


UlustraUon  No.   20. 


Cash 


CREDIT  SIDE 


U^<.-c^ 


^^^  f^ry^ 


.i^^^C 


:,^^ 


~:4^^^-^^^. 


J.  ff 


28.     I  discount  my  note  issued  for  merchandise  sometime  ago.       This  note  is  interest 
bearing.     For  form  of  interest  bearing  note  see  illustration  No.  21. 


Illustration    No.    21. 


l^tj  / Ja. 


yf 


Lancaster,  Pa.  ^^^^1..^^,   /^.^ lO 


% 


J^.  ....3.. Qjcae.Chc^..y>3./f- 


First  transaction.  I  pay  my  note.  (For  a  similar  transaction,  see  paragraph  26,  First 
transaction.) 

Second  transaction.     I  pay  the  interest  due  on  my  note. 

Definition  of  Interest  from  the  BORROWER'S  or  PAYER'S  view  point:— A  certain 
sum  which  must  be  paid  by  one  who  has  borrowed  money  for  the  use  of  the  amount  bor- 
rowed. 

Note: — The  borrower  is   also   the  payer. 

Important.     Interest  is  an  obligation  which  can  be  liquidated  by  payment  only. 

In  this  case,  cash  performs  the  service  in  that  it  liquidates  or  closes  my  obligation  known 
as  Interest,  therefore,  Interest  is  the  result.  According  to  the  rule,  the  service  is  credited. 
Since  the  service  is  credited,  and  since  cash  has  performed  the  service,  it  must  follow  that 
cash  must  be  credited.  Again,  according  to  the  rule,  the  result  is  debited.  Since  the  re- 
sult is  debited,  and  since  Interest  is  the  result,  it  must  follow  that  Interest  must  be  debited. 

Third  transaction.  I  receive  the  amount  of  the  discount  in  cash.  (For  a  similar  trans- 
action, see  paragraph  26,  Second  transaction.)  Foi-  the  three  entries  in  this  case  see  illu- 
stration No.  22. 


Illustration   No.   22. 


Cash 


CREDIT  SIDE 


-.ci^-J^ 


-2^ 


-Z^ 


.ZJ.. 


^^.£^*^=i>^^^^^^i^^ 


kr^ 


^^dtOitL'- «-•?   /<^ 


^=:^^:^<z-^-VV  r^-^^ J^r^<Ue^^^y^.^t!^^^tfX<f^^^f^ 


-C^ 


-^-f- 


JuL 


12 


Cash 


DEBIT    SIDE 


29.  I  have  a  note,  which  I  received  for  merchandise  sold  sometime  ago,  discounted. 
This  note  is  interest  bearing. 

First  transaction.  I  collect  the  money  on  the  note.  (For  a  similar  transaction  see  para- 
graph 27,  First  transaction.) 

Second  transaction.     I  collect  the  interest,  due  me,  on  this  note. 

Definition  of  Interest  from  the  LENDER'S  or  RECEIVER'S  view  point:— A  certain 
sum  which  must  be  paid  to  the  lender  of  mone}'  for  the  use  of  the  amount  loaned. 

Note: — The  lender  is  also  the  Receiver  or  Holder. 

Interest  performs  the  service  in  that  it  brings  into  my  business  cash,  therefore,  cash 
is  the  result.  (Had  it  not  been  for  Interest  I  would  not  have  received  this  cash.)  Accord- 
ing to  the  rule,  the  service  is  credited.  Since  the  service  is  credited  and  since  Interest  has 
performed  the  service  it  must  follow  that  Interest  must  be  credited.  Again,  according  to 
the  rule,  the  result  is  debited.  Since  the  result  is  debited,  and  since  cash  is  the  result,  it  must 
follow  that  cash  must  be  debited. 

Third  transaction.  I  pay  the  amount  of  the  discount  in  cash.  (For  a  similar  trans- 
action, see  paragraph  27,  Second  transaction.)  For  the  three  entries  in  this  case  see  illu- 
stration No.  23. 


Illustration    No.    23. 


Cash 


DEBIT    SIDE 


(^^u<^^ 


xsLZ 


-^^ 


y^^^^^.^^y^^^-.e.^.^t^ist-'^'i^^^    .^^o<^>^^»H*^^V!!^»^.,»-z^rf</>. 


yji. 


t=;y^^^Ztc^^^w>>^ 


/^j^^^^^ti'^rf^ajCr 


/f%r 


^^ 


Cash 


CREDIT  SIDE 


^^U«^  ^,^^.<^yi^^.^..,*^^^ 


^^^ 


30.     I  buy  stamps  for  cash. 

Remember  to  ascertain  what  the  thing  is  which  you  buy,  before  you  analyze  the  trans- 
action. 

Stamps  are  an  expense.  (See  paragraph  11   (C)).     (See  Note  under  paragraph  11.) 

Cash  performs  the  service  in  that  it  brings  into  my  business  stamps,  which  come  un- 
der the  heading  of  expense,  therefore  Expense  will  be  the  result.  According  to  the  rule,  the 
service  is  credited.  Since  the  service  is  credited,  and  since  cash  has  performed  the  service, 
it  must  follow  that  cash  must  be  credited.  Again,  according  to  the  rule,  the  result  is  debited. 
Since  the  result  is  debited,  and  since  Expense  is  the  result,  it  must  follow  that  Expense 
must  be  debited.    For  entry  see  illustration  No.  24. 


Illustration   No.   24. 


Cash 


CREDIT  SIDE 


^ 


^=*^ 


.^^ 


z^,.^^ 


— -c:^-^'^!^8^■<»^»^<^ 


ir 


-<^ 


13 


31.     I  pay  cash  for  one  month's  rent  of  store  room. 

Rent  is  an  expense.     (See  paragraph  11  (C))     (See  Note  under  paragraph  11.) 

Cash  performs  the  service  in  that  it  brings  into  my  business  the  use  of  a  store  room, 
which  is  known  as  rent,  and  which,  in  turn,  is  known  as  expense,  therefore  Expense  is  the 
result.  According  to  the  rule,  the  service  is  credited.  Since  the  service  is  credited,  and  since 
cash  has  performed  the  service,  it  must  follow  that  cash  must  be  credited.  Again,  accord- 
ing to  the  rule,  the  result  is  debited.  Since  the  result  is  debited,  and  since  Expense  is  the 
result,  it  must  follow  that  Expense  must  be  debited.     For  entry  see  illustration  No.  25. 


Illustration  No.   25. 


Cash 


CREDIT  SIDE 


Note: — A  separate  account  may  be  kept  for  rent.  In  this  event,  instead  of  calling  the 
use  of  the  store  room  expense,  call  it  Rent.  In  applying  the  rule,  the  thing  that  will  be 
debited,  in  this  case,  will  be  Rent  instead  of  Expense.  (See  "Example  of  Subdivided  Ex- 
pense Account,"  paragraph  11.) 


DRAFTS 

32.     A  Draft: — A  written  request  drawn  by  a  first  party,  on  a  second  party,  ordering 
the  second  party  to  pay  a  certain  sum  of  money  to  a  third  party. 

Note: — The  first  party  is  known  as  the  Drawer,  the  second  party.   Drawee,  and  the 
third  party,  Payee. 

Kinds  of  Drafts: — Sight  and  Time. 

Sight  Draft : — A  draft  payable  on  demand.     For  form  see  illustration  No.  26. 


Illustration  No.  26. 


DRAFT  AT  SIGHT 


^y^..zAL 


Baltimore,  Md.,  j::;^^^^.  ^r^lO 


(^^^^^^-^^■(/^.^^f^^ 


^^^^.^^.^,^,.... 


i 


'^cya/u  ^o  tne  %. 


1 


14 


Time  Draft:— A  draft  payable  so  many  days  "after  date"  or  "after  sight."     For  forms 
see  illustrations  No.  27  a  b  c. 


Illustration  NO.  27a.  DRAFT     AFTER     DATE 

/.M.AC^ Philadelphia,  Pa.,  ...{^;^^^..^..^.^..19. 


»4« 


M. 


ff^^^er  o/:1^.AC 


^ 

.M-^-^ 


J  a/ft  f  yf'cpi'if4'f/,  afitl  enetd^v  /he  ^cftne  /o  aceott'n/  cd  J#J 


?gyr?  -o^^y^^ 


z.^^ 


r^. 


Illustration   No.   27b. 


DRAFT  AFTER   SIGHT 


I 


i 


^Ji./2..A:?rrr.. 


Wellsboro,  Pa., 


J.,  v^ 


i 


^^-^.-^^.-^^?::^gg^^»^^^::^<lr^«g^  iyctii,  lo  /ne  i! 


j4i/aye  ^f€€4/tP4></,  uTtd  cntfy^p  /Ae  i^ct^me  /o  ancou/n/ 


Note: — "After  sight"  means  after  the  date  of  acceptance. 

Acceptance: — The  word  "Accepted"'  together  with  the  date  of  acceptance  and  the  name 
of  the  Drawee,  written  across  the  face  of  the  draft. 

Important-  As  soon  as  the  acceptance  is  written  across  the  face  of  the  draft,  it  (the 
draft)  becomes  a  written  promise  to  pay.  The  party  who  has  made  the  promise  and  who 
must  pay  the  instrument  is  the  acceptor  or  Drawee.  A  written  promise  to  pay  a  certain 
sum  of  money,  is  known  as  a  note.  (See  definition  for  a  note,  paragraph  16).  Therefore, 
to  the  Drawee,  the  accepted  draft  becomes  a  Note  Payable,  while  to  the  Payee,  who  re- 
ceives the  accepted  draft  it  becomes  a  Note  Receivable. 


15 


Illustration  No.  27c. 

DRAFT   AFTER   DATE   SHOWING    ACCEPTANCE 


$.^./../:c4f V  Hanover,  PA.,....,<4^;k2:>:::...^..jL 19. I 


^'2^^■<£■<^i■■g-^f^^..■^'^^^^<?■i^'^^'^^^^^^ 


BE  SURE  to  look  up  illustrations  Nos.  26  and  27.     You  will  find  additional  valuable 
information. 

Important.     The  Drawer  is  owed  by  the  Drawee  and  the  Drawee  owes  the  Payee. 
I  draw  a  time  draft  on  Sam'l  Marks  in  favor  of  Wm.  Mason.     Sam'l  Marks  accepts  the 
draft. 

Note: — In   this   case,    Marks   owes    the   Drawer  and  the  Drawer  owes  Mason. 

'  Marks  performs  the  service  in  that  he  liquidates  my  indebtedness  with  Wm.  Mason 
(on  my  books,  Mason  is  credited,  Marks'  acceptance  of  the  draft  offsets  this  credit. 
Therefore  the  result  is  the  offsetting  of  Mason's  account),  therefore  Wm.  Mason's  account 
is  the  result.  According  to  the  rule  the  service  is  credited.  Since  the  service  is  credited  and 
since  Marks  has  performed  the  service,  it  must  follow  that  Marks  must  be  credited.  Again, 
according  to  the  rule,  the  result  is  debited.  Since  the  result  is  debited'and  since  the  liqui- 
dation of  Mason's  account  is  the  result,  it  must  follow  that  Mason's  account  must  be  debited. 
For  entry  see  illustration  No.  28, 


Ulustration  No.  28. 


Journal 


.-c^f'tyi^ii^^^^-^/iycT^i^^^M- 


33.     H.  B.  Wright  draws  a  time  draft  on  Me  in  favor  of  John  Wood.    I  accept  the  draft. 

Note: — When   I   accept  this   draft,   it  becomes  a  Note  Payable  to  me. 

Note  Payable  performs  the  service  in  that  it  liquidates  my  account  with  H.  B.  Wright, 
therefore  H.  B.  Wright's  account  is  the  result.  According  to  the  rule  the  service  is  credit- 
ed. Since  the  service  is  credited,  and  since  Note  Payable  has  performed  the  service,  it 
must  follow  that  Note  Payable  must  be  credited.     Again,  according  to  the  rule,  the  result 


16 


is  debited.  Since  the  result  is  debited,  and  since  the  liquidation  of  Wright's  accouni  is  the 
result,  it  must  follow  that  H.  B.  Wright's  account  must  be  debited.  For  entry  see  illustra- 
tion No.  29. 


niustration  No.  29. 


NOTES 


M- 


WHEN 
GIVEN 


DRAWER  (draft) 

OR 
ENDORSER  (note) 


in  whose  favor 

(payee) 


(yf-*^    /  AyV^^&  ^^^^-^^^  J^^-^-^ 


DRAWEE  (draft) 
OR 
MAKER  (note) 


FOR  WHAT 
GIVEN 


v^^^^  ^X^/^:^. 


WHERE  PAYABLE 


^4^Xr»X.rr'1f'-<-f,y^^. 


Payable 


DATE 

TIME 

WHEN  DUE 

... 

AMOUNT 

DISPOSITION 

TEAR 

MONTH 

DAY 

TUB 

Ju. 

r«b. 

Mat. 

Apr. 

M.J 

JUM 

July 

Aug. 

Stpt 

Oct 

KOT. 

Dm. 

amount" 

DATE 

REMARKS 

Z^- 

^ 

// 

'  ?/^«& 

r  Z^- 

r 

/)- 

^/^a'aA 

_ 

34.  Wm.  Oliver  draws  a  time  draft  on  John  Perry  in  favor  of  Me.  John  Perry  accepts 
the  draft. 

Note: — This  accepted  draft  becomes  a  note.  I  receive  it,  hence  it  is  a  Note  Receivable 
to  me. 

Wm.  Oliver  performs  the  service  in  that  he  brings  into  my  business  a  Note  Re- 
ceivable, therefore  Note  Receivable  is  the  result. 

Remember  that  while  John  Perry  really  gives  me  the  note  he  does  not  owe  me  any- 
thing.  Perry  gives  me  the  note  at  the  request  of  Wm.  Oliver,  who  owes  me  money. 

According  to  the  rule,  the  service  is  credited.  Since  the  service  is  credited  and  since 
Wm.  Oliver  has  performed  the  service,  it  must  follow  that  Wm.  Oliver  must  be  credited. 
Again,  according  to  the  rule  the  result  is  debited.  Since  the  result  is  debited,  and  since 
Note  Receivable  is  the  result,  it  must  follow  that  Note  Receivable  must  be  debited.  For 
entry  see  illustration  No.  30. 


Illustration  No.   30. 


Notes 


WHEN 
RECEIVED 


DRAWER  (draft) 

OR 
ENDORSER  (noTe) 


FOR  WHAT 
RECEIVED 


WHERE  PAYABLE 


_4^ 


^ 


■^ 


^^S^ft^C^i^^ 


^  ,.^r-«^  ^^  /^  yj^j^^^^^jf^  .^la:^ 


Receivable 


DATE 

TIME 

WHEN  DUE 

L.F. 

.., 

DISPOSITION 

YEAR 

MONTH 

DAY 

TSU 

Jan. 

P«b. 

Mar. 

ipr.- 

lUy 

June 

July 

Aug. 

Stpt. 

Oct 

Not. 

Dae. 

AMOUNT 

DATE              REMARKS 

'^- 

-^^^^ 

/-« 

..iM^t^ 

^/f- 

/,f 

a 

/  K.1. 

j^a 

17 


35.     I  draw  a  time  draft  on  Jacob  Klein    in  favor  of  Myself.     Klein  accepts  the  draft. 

Note : — In  this  case,  the  accepted  draft  or  note  comes  to  me  as  I  am  both  Drawer  and 
Payee.      The  instrument  is  always  given  to  the  Payee. 

Jacob  Klein  performs  the  service  in  that  he  brings  into  my  business  a  Note  Receivable, 
therefore  Note  Receivable  is  the  result. 

For  application  of  the  rule,  see  paragraph  34.    For  entry  see  illustration  No.  31. 


Illustration  No.   31. 


Notes 


No. 


WHEN 
RECEIVED 


DRAWER  (DRAfx) 

OH 
ENDORSER  (noTe) 


in  whose  favor 

(payeb) 


DRAWEE  (draft) 
OR 
MAKER  (note) 


FOR  WHAT 
RECEIVED 


WHERE  PAYABLE 


_zi_l^ 


fefe^ 


>^.(^»-./u^  ^y^Af.    Zf^!ffH^y.  'Ya^  . 


RECEIVABLE 


DATE 

TIME 

WHEN  DUE 

L.F. 

AMOUNT 

DISPOSITION 

YEAR 

MONTH 

DAY 

TEiR 

Jul 

Feb. 

Har. 

Apr. 

May 

Jane 

July 

Aug. 

Sept. 

Oct. 

Not. 

Deo. 

AMOUNT 

DATE 

REMARKS 

yf- 

/^^«'e-l7. 

y(^ 

ZiL£mA 

/^~ 

?^r 

a 

//-l 

^/? 

-t-'l .         y. 

V 

7 

36.     I  draw  a  sight  draft  on  Oliver  Myers  in  favor  of  Edw.  Martin. 

Remember  a  sight  draft  is  payable  on  demand. 

Oliver  Myers  performs  the  service  in  that  he  liquidates  my  indebtedness  with  Edw. 
Martin,  therefore  the  liquidation  of  Martin's  account  is  the  result.  (  On  my  books  Martin 
is  credited.    Myers'  payment  of  this  draft,  on  demand,  offsets  this  credit.) 

For  application  of  the  rule,  see  paragraph  32.      For  entry  see  illustration  No.  32. 


lUustration  No.  32. 


JOURNAL 


L^Ct^t^ 


.AJ^ 


^fZ- 


<l^^il^^>£^*^y^^^4it..'iyfii,<»<L^ 


M^^y^<:t^  *(?yiTif 


\...A^i^^'-<>r'j^^Z'Y^e^^^^ /:i^/L€t.e>e^-^t^^^*t^2^^ 


,£^L^ 


Icd^  ^ 


/-^  ^  ^ a 


/ ^^\r  6 


37.     Howard  Ort  draws  a  sight  draft  on  Me  in  favor  of  Wm.  Wentz.  The  draft  is  pre- 
sented to  Me  for  payment. 

Cash  performs  the  service  in  that  it  liquidates    my    indebtedness   with   Howard     Ort, 
therefore  the  liquidation  or  closing  of  Howard  Ort's  account  is  the  result. 

Note: — The  sight  draft  is  not  accepted  but  is  paid  on  demand.    Since  it  is  not  accept- 
ed it  does  not  become  a  note.    Since  it  is  paid  on  demand,  it  has  the  same  affect  as  a  check. 

Important.     The  sight  draft  is  handled  the  same  as  a  check. 

According  to  the  rule  the  service  is  credited.     Since  the  service  is  credited,  and  since 
cash  has  performed  the  service,  it  must  follow  that  cash  must  be  credited.      Again,  accord- 


18 


ing  to  the  rule,  the  result  is  debited.  Since  the  result  is  debited,  and  since  the  liquidation 
or  closing  of  Howard  Ort's  account  is  the  result,  it  must  follow  that  Howard  Ort's  ac- 
count must  be  debited.    For  entry  see  illustration  No.  33. 


Illustration  No.  33. 


Cash 


CREDIT   SIDE 


C^^^. 


aA. 


A/L,.t.^^w</^CJ:k^ .<iLy,^4^^i^^.  i^j^t^  ^/y^  /«r 


-^^ 


X^ 


38.  Edward  Park  draws  a  sight  draft  on  Morris  Town  in  favor  of  Me.  The  draft  is 
presented  by  Me  for  payment. 

Remember  that  the  sight  draft  is  the  same  as  a  check. 

Edward  Park  performs  the  service  in  that  he  brings  into  my  business  cash,  which 
liquidates  or  closes  his  account  on  my  books,  therefore  cash  is  the  result. 

Remember  that  \  have  had  no  business  relations  with  Morris  Town  and  that,  while 
Morris  Town  has  actually  given  to  me  the  money,  he  has  done  it  only  as  a  favor  to  Ed- 
ward Park  and  for  the  purpose  of  liquidating  or  closing  Park's  account  on  my  books. 

The  Reason  why  Town  did  this  favor  for  Park  was  because  Town  owed  Park  money. 

According  to  the  rule  the  service  is  credited.  Since  the  service  is  credited  and  since 
Edward  Park  has  performed  the  service,  it  must  follow  that  Edward  Park  must  be  credit- 
ed. Again,  according  to  the  rule,  the  result  is  debited.  Since  the  result  is  debited,  and 
since  cash  is  the  result,  it  must  follow  that  cash  must  be  debited.  For  entry  see  illustra- 
tion No.  34. 


Illustration  No.  34. 


Gash 


DEBIT    SIDE 


39.  I  draw  a  sight  draft  on  E.  R.  Burr  in  favor  of  Myself.  The  draft  is  presented  by 
Me  for  payment. 

E.  R.  Burr'  performs  the  service  in  that  he  brings  into  my  business  cash,  therefore 
cash  is  the  result.  According  to  the  rule,  the  service  is  credited.  Since  the  service  is  credit- 
ed, and  since  E.  R.  Burr  has  performed  the  service,  it  must  follow  that  E.  R.  Burr  must  be 
credited.  Again,  according  to  the  rule  the  result  is  debited.  Since  the  result  is  debited, 
and  since  cash  is  the  result,  it  must  follow  that  cash  must  be  debited.  For  entry  see  illustra- 
tion No.  35. 


Illustration  No.  35. 


Cash 


DEBIT    SIDE 


C^f^rt.>Cy. 


L.F. 


^£^^<£-^-^^^ -.^Cf^^CAj^  b/^^^^//. 


2^: /U2.A. 


pTf? 


40.  Important,  (a)  K.  time  draft  becomes  a  Note  Payable  to  the  party  who  ac- 
cepts it.  (b)  A  time  draft  becomes  a  Note  Receivable  to  the  party  who  holds  it  after 
acceptance. 


19 


Payment  and  Collection  of  Time  Drafts 

Maturity  means  that  the  time  given  in  which  to  fulfill  a  promise,  has  expired,  and 
that  the  promise,  represented  in  the  instrument  (Note  or  Accepted  Draft),  must  now  be 
fulfilled. 

41.  I  pay  a  time  draft  (Note  Payable),  which  was  drawn  on  Me  by  William  Simpson 
in  favor  of  Samuel  Keller. 

Note: — When  it  is  stated,  "I  pay  a  time  draft",  etc.,  it  will  be  understood  that  the  in- 
strument  has   been   accepted   sometime   previous  to  the  payment. 

Cash  performs  the  service  in  that  it  brings  into  my  business  my  cancelled  or  receipted 
note  or  Note  Payable,  therefore  Note  Payable  is  the  result.  For  application  of  the  rule  see 
paragraph  21.    For  a  similar  entry  see  illustration  No.  10. 

42.  I  discount  a  time  draft  (Note  Payable),  which  was  drawn  on  Me  by  John  Hoe  in 
favor  of  William  Johnson. 

First  transaction.     I  pay  my  note  (accepted  draft.) 

Cash  performs  the  service  in  that  it  brings  into  my  business  my  Note  Payable  (the 
draft  which  I  accepted),  cancelled  or  receipted,  therefore  Note  Payable  is  the  result.  For 
application  of  the  rule  see  paragraph  26.    For  a  similar  entry  see  illustration  No.  17. 

Second  transaction.  I  receive  the  amount  of  the  discount  in  cash.  Discount  performs 
the  service  in  that  it  brings  into  my  business  cash.  (Had  it  not  been  for  Discount  we 
would  not  have  received  this  cash),  therefore  cash  is  the  result.  For  application  of  the 
rule  see  paragraph  26.     For  a  similar  entry  see  illustration  No.  18. 


43.  I  collect  the  money  for  a  time  draft  (Note  Receivable),  which  was  drawn  by  Carl 
Short  on  Clyde  Hoke  in  favor  of  Me. 

Note: — When  it  is  stated,  "I  collect  the  money,"  etc.,  it  will  be  understood  that  the  in- 
strument   has    been    accepted   sometime    previous  to  the  collection. 

The  Note  Receivable  performs  the  service  in  that  it  brings  into  my  business  cash, 
therefore  cash  is  the  result.  (My  cancelling  or  receipting  the  note  and  returning  it  to  the 
payer,  has  been  instrumental  in  bringing  into  my  business  the  cash.)  For  application  of  the 
rule  see  paragraph  23.     For  a  similar  entry  see  illustration  No.  12. 

44.  I  discount  a  time  draft  (Note  Receivable),  which  was  drawn  by  H.  B.  Scott  on 
E.  C.  Eckles  in  favor  of  Me. 

First  transaction.    I  collect  the  money  on  a  note.  (Accepted  draft.) 

Note  Receivable  (accepted  draft)  performs  the  service  in  that  it  brings  into  my  busi- 
ness cash,  therefore  cash  is  the  result.  For  application  of  the  rule  see  paragraph  27.  For 
a  similar  entry  see  illustration  No.  19. 

Second  transaction.  I  pay  the  amount  of  the  discount  in  cash-  Cash  performs  the  serv- 
ice in  that  it  discharges  my  obligation  known  as  Discount,  therefore  Discount  is  the  re- 
sult. For  application  of  the  rule  see  paragraph  27.  For  a  similar  entry  see  illustration  No. 
20. 

Important.     Drafts  are  never  interest  bearing. 

45.  I  buy  merchandise  on  account  from  Adam  Wise.  See  paragraph  14.  I  return 
this  merchandise  to  Adam  Wise  as  being  unsatisfactory. 

Note: — When   merchandise    is   returned   by  you,  consider  it  the  same  as  if  it  were  sold. 

20 


Merchandise  performs  the  service  in  that  it  liquidates  or  closes  my  former  indebtedness 
to  Adam  Wise,  therefore  the  liquidation  or  closing  of  Adam  Wise's  account  is  the  result. 
According  to  the  rule  the  service  is  credited.  Since  the  service  is  credited,  and  since 
merchandise  has  performed  the  service,  it  must  follov^  that  merchandise  must  be  credited. 
Again,  according  to  the  rule  the  result  is  debited.  Since  the  result  is  debited  and  since 
the  liquidation  or  closing  of  Adam  Wise's  account  is  the  result,  it  must  follow  that  Adam 
Wise's  account  must  be  debited.     For  entry  see  illustration  No.  36. 


Illustration  No.   36. 


JOURNAL 


^^c^- 


AjL 


.ZA. 


.AJ^ 


^^i^ 


r^-«^^»»g<^ 


.^^ly^^^^y^jyc***-^-'  ^-»/> 


y/^^^^r^^..*t.^^^^t£~g^ ,^/^i.t.aruf<n^**.^^^^^^A<'^iit*^  '- 


/  <?xS    /  f 


/  a^  /  r 


46.  I  sell  merchandise  on  account  to  B.  C.  Wells.  See  paragraph  17.  This  merchan- 
dise is  returned  to  Me  by  B.  C.  Wells  as  being  unsatisfactory. 

Note:— When  merchandise  is  returned  to  you,  consider  it  the  same  as  if  it  were  pur- 

chased. 

B.  C.  Wells  performs  the  service  in  that  he  brings  into  my  business  merchandise, 
therefore  merchandise  is  the  result.  For  application  of  the  rule  see  paragraph  14.  For 
entry  see  illustration  No.  37. 


Illustration  No.   37. 


JOURNAL 


^!^s<£^ 


-^ 


^^^  ^^^^.^r^i^^^^ 


.Ai£- 


X?  r.  ^.,.lAAi^ 


-^^ 


/J. 


^-r 


/  ^ 


Note:— It  is  deemed  more  advisable,  in  the  last  two  cases  cited  (45-46),  not  to  place 
the  merchandise  returned  under  the  merchandise  account,  as  it  makes  that  account  appear 
as  though  you  bought  more  goods,  in  the  one  case  (46),  and  sold  more  goods,  in  the  other 
case  (45),  than  you  really  did.  It  would  be  better  to  place  merchandise  returned,  therefore 
to  an  account  known  as  Merchandise  Returned  and  carry  the  balance,  shown  by  this  ac- 
count, to  the  regular  merchandise  account,  when  the  ledger  is  closed.  This  will  have  no 
effect  on  the  application  of  the  rule.  For  entry  showing  cases  45-46  placed  to  Merchandise 
Returned  account  see  illustration  No.  38  a  and  b. 


Illustration  No.  38a. 


JOURNAL 


^^ 


L.  F. 


JJL 


<^^^ir^tit,<*'»^^  ./^ 


yg-*-*^  >^^  ^  ^^ 


/'^^^it,^ ^ztU^ru^*^ /  ^'J    /  f 


y^^^^^''^::^'i'^:ie.'e^^''»-t^.A^    >-*^fctJ*>  ^  ^^^  •^/^^^.^/s,  y. 


/4><S-    /    F 


Illustration    No.    38b. 


Journal 


^9- 


M£L 


^^^^^^.^UJ^<4.f>tJi,0Ljud. ^f 


^a  ;^-^.^^^^- 


-/-j^ 


21 


Important.  Shortages,  damages,  overcharges,  etc.,  may  be  kept  under  the  same  head- 
ing, that  is.  Merchandise  Returned  account. 

It  will  be  helpful  to  remember  that  in  the  case  of  merchandise  returned,  refunds  or 
rebates,  if  a  special  account  is  not  kept,  an  entry  exactly  opposite  to  the  original  entry  is 
always  made.    For  example  see  illustration  No.  39  a  b  c  d. 


Illustration  No.   39a. 


PURCHASE  Book 


^^^V 


^g^^^^-^^^^^f^^^"^*^^  ^^Z*^^i/^  ^.±<?//^- 


/.n 


^  X- 


Illustration   No.    39b. 


JOURNAL 


-^ 


y^hrr-z^.  ^^z^t:<^^^-^-^^ /'^t.^c^  ^ta'^g^*^  -^  fi//f- 


./^^A^^^^. 


-^^^»-«-*^<g<^ig^^g>i^^^:^»"^^ 


M^ 


a  r 


-4^ 


(p  r 


T^ 


Illustration   No.    39c. 


Sales  Book 


^^^ 


Yf- 


y^ 


zAr^^/^ (g, Ms^-^ 


y£l  ff 


^2. (g^x    ^3  a  /^ 


i/i^ 


^ 


^7^ 


^  X 


r-^ 


Illustration   No.    39d. 


Journal 


C^^<^ 


^-<^c^. 


L.  F. 


^^^^t-^^*^:;<^lag-»g-«iz::^-«^ 


v^ 


y^^^  ^jZ^^^J>/y^ 


_^^;!!^^22^^=A<^)^2*<^ 


^^' 


<^^..^tt^.,e^t^yt.^£^lt.£e.^^^ayej6t4.  <_ 


/  :! 


^1^ 


.A^ 


.ajL 


47.     I  buy  merchandise  for  cash  from  Ralph  Peterson. 

For  application  of  the  rule  see  paragraph  15.      For  entry  see  illustration  No.  3. 

(a)  Note: — If  it  is  desired  to  keep  a  record  of  this  transaction  in  the  personal  ac- 
count, that  is  in  Ralph  Peterson's  account,  it  will  be  necessary  to  divide  the  case  into  two 
transactions. 

First  transaction.     I  buy  merchandise  from  Ralph  Peterson. 

Note: — The  presumption  is  that  you  buy  it  on  account. 

For  application  of  the  rule  see  paragraph  14.  For  a  similar  entry  see  illustration  No. 
2. 

Second  transaction.  I  pay  Ralph  Peterson.  (For  the  merchandise  purchased  from  him 
in  the  first  transaction).  For  application  of  rule  see  paragraph  20.  For  a  similar  entry 
see  illustration  No.  9. 


22 


(b)  Note: — A  transaction  is  disposed  of  in  this  manner  for  the  purpose  of  ascertain- 
ing at  any  time  the  entire  amount  of  business  done  with  a  person,  firm  or  corporation. 

It  will  be  noticed  that  while  two  transactions  are  made  out  of  this  case,  as  shown  in 
this  paragraph,  and  only  one  transaction  as  shown  in  paragraph  15,  the  ultimate  result 
will  be  the  same.  The  personal  account  will  have  the  same  amount  on  each  side  thus 
liquidating  or  closing  it.  This  leaves  a  debit  in  the  merchandise  account  and  a  credit  in 
the  cash  account.  The  method  of  handling  this  case,  as  shown  in  paragraph  15,  only  pro- 
duces a  debit  in  the  merchandise  account  and  a  credit  in  the  cash  account.  For  compara- 
tive illustrations  of  these  methods  and  for  the  purpose  of  showing  the  similar  ultimate  re- 
sults,  see   illustration   No.   40.     Also  illustration  No.  3. 

Important.  In  buying  merchandise  for  a  note  from  a  person,  firm  or  corporation,  pro- 
ceed in  the  same  way  as  shown  in  paragraph  47,  providing  you  wish  to  keep  a  record  of 
the  transaction  in  the  personal  account.  If  the  record  in  the  personal  account  is  not  de- 
sired, proceed  as  in  paragraph  16. 


Illustration  No.   40. 


PURCHASE  Book 


^*^ 


7^a,^t!^i-^'^k^:c-ti^<^'rt^ 


(/±  'x//f- 


/  ^  f  /  ff 


Cash 


CREDIT  SIDE 


C'^-* 


''^'^~ 


^^=^  C.F. 

2^    /^Pf^^^-;^^ 


^/^^/.<r^ 


y^f  r 


/  <? 


48.     I  sell  merchandise  for  cash  to  Arthur  Owens. 

For  application  of  the  rule  see  paragraph  18.  For  entry  see  illustration  No.  7.  See 
Note  (a)  paragraph  47.    Be  sure  to  read  this  note. 

First  transaction.     I  sell  merchandise  to  Arthur  Owens. 

Note: — The  presumption  is  that  you  sell  it  on  account. 

For  application  of  the  rule  see  paragraph  17-    For  a  similar  entry  see  illustration  No.  6. 

Second  transaction.  I  receive  cash  from  Arthur  Owens.  (For  the  merchandise  sold  to 
him  in  the  first  transaction).  For  application  of  the  rule  see  paragraph  22.  For  a  similar 
entry  see  illustration  No.  11. 

See  note  (b)  paragraph  47.     Be  sure  to  read  this  note. 

It  will  be  noticed  that  while  two  transactions  are  made  out  of  this  case,  as  shown  in 
this  paragraph,  and  only  one  transaction  as  shown  in  paragraph  18,  the  ultimate  result 
will  be  the  same.  The  personal  account  will  have  the  same  amount  on  each  side  thus 
liquidating  or  closing  it.  This  leaves  a  debit  in  the  cash  account  and  a  credit  in  the  mer- 
chandise account.  The  method  of  handling  this  case,  as  shown  in  paragraph  18,  only  pro- 
duces a  debit  in  the  cash  account  and  a  credit  in  the  merchandise  account.  For  compara- 
tive illustrations  of  these  methods  and  for  the  purpose  of  showing  the  similar  ultimate 
results,  see  illustrations  Nos.  41  and  7. 


Illustration  No.  41. 


Sales  Book 


^^^^f*^<^- 


L.  F. 


4^i^^?gL^>^^^^xg^.>i^>^  ^^ 


^ a (^^.ry^^^x!:^ ji.  /Z^.^*.^  /xaCf^.    (g.   /c?^y 


^5^ 


-Z^ 


^^Z^L<.^  <?^  ':!<P^;Kt?^  J  ^  ^^     (S  /  f  /^ 


(i,^  fa 


/  /  X 


:.^U2L 


23 


Cash 


DEBIT    SIDE 


.^^^^ 


^^^^^   </^v/^.^- 


//x 


^^a 


Important.  In  selling  merchandise  to  a  person,  firm  or  corporation  for  a  note,  pro- 
ceed in  the  same  way  as  shown  in  paragraph  48,  providing  you  wish  to  keep  a  record  of 
the  transaction  in  the  personal  account.  If  the  record  in  the  personal  account  is  not  de- 
sired, proceed  as  in  paragraph  18. 


49.  Negotiable  notes  and  drafts  are  those  which  can  be  transferred  from  one  party  to 
another  by  endorsement  and  delivery.  Only  those  commercial  papers  (notes,  drafts, 
checks,  etc.)  which  contain  the  words  "or  order"  or  "or  bearer"  are  said  to  be  negotiable. 
For  illustration  of  negotiable  note,  draft  and  check  see  illustrations  Nos.  21,  28d,  42. 

Commercial  paper  (notes,  drafts,  checks,  etc.)  which  do  not  contain  the  words  "or 
order"  or  "or  bearer"  are  said  to  be  non-negotiable. 

Note: — In  most  states  non-negotiable  paper  may,  by  statute,  be  transferred  by  assign- 
ment. 


Illustration  No.   42. 


CHECK 


NO.-/- 


THE  Union  National  Bank 


YORK,  PA. 


^e^S^a^dr^\ 


C^^/^^^^ 


^^^-t^y^ 


50.     Endorsement: — The  special  writing  across  the  back  of  negotiable  paper  which,  to- 
gether with  delivery,  transfers  it  from  one  party  to  another. 


Kinds  of  Endorsements  and  their  definitions. 

(a)  Blank: — Where  the  holder  transfers  the  paper  by  writing  his  name  across  the  back. 
See  illustration  No.  43. 

(b)  Full: — Where  the  holder  writes  his  name  across  the  back  of  the  paper  together 
with  the  directions  to  pay  a  certain  party.     See  illustration  No.  44. 


24 


(c)  Restrictive : — Where  the  holder  writes  his  name  across  the  back  of  the  paper  to- 
gether with  the  directions  to  pay  a  certain  party  and  indicating  for  what  purpose  it  shall 
be  paid.      See  illustration  No.  45. 

Note : — A  restrictive  endorsement  does  not  transfer  the  paper  to  the  endorsee,  but  indi- 
cates that  the  endorsee  is  acting  in  the  capacity  of  agent  for  the  endorser, 

(d)  Without  Recourse : — Where  the  holder  writes  his  name  across  the  back  of  the 
paper  together  with  the  directions  to  pay  a  certain  party  and  the  words  "without  recourse". 
See  illustration  No.  46. 


ENDORSEMENTS 


Illustration  No.    43. 

Blank 


Illustration  No.   44. 

FULL 


Illustration  No.  45. 

RESTRICTIVE 


l^^t^^-^-fT^ 


^ 


Note: — The  words  "without  recourse"  are  said  to  relieve  the  endorser  from  all  lia- 
bility in  case  the  maker  does  not  pay, 

(e)  Conditional: — Where  the  holder  writes  his  name  across  the  back  of  the  paper  to- 
gether with  the  directions  to  pay  a  certain  party,  and  stipulating  a  certain  condition  to  be 
fulfilled   before   the   endorsement   shall   be   effective.      See  illustration  No.  47. 


Illustration   No.    46. 

Without   recourse 


Illustration  No.   47. 
CONDITIONAL 


J^^e^-^'-f'^^ 


^ 


~^^^.^t^  <C^~^ 


j^^^^^::^ 


5L     I  buy  merchandise  for  a  note. 

Information: — This   note  was   received  sometime  ago  by  me  for  selling  merchandise. 

Remember  when  this  note  came  in,  it  was  a  note  receivable  (to  me).  It  will  have  to 
remain  a  note  receivable  even  though  you  give  it  to  another  party  in  payment  of  goods. 

Note  Receivable  performs  the  service  in  that  it  brings  merchandise  into  my  business, 
therefore  merchandise  is  the  result.  According  to  the  rule  the  service  is  credited.  Since 
the  service  is  credited  and  since  Note  Receivable  performed  the  service,  it  must  follow  that 
Note  Receivable  must  be  credited.  Again,  according  to  the  rule,  the  result  is  debited.  Since 
the  result  is  debited  and  since  merchandise  is  the  result,  it  must  follow  that  merchandise  must 
be  debited.    For  entry  see  illustration  No.  48. 


25 


Illustration  No.   48. 


PURCHASE  Book 


;_:^j:l..,^^*^:.£5^^fc:i^**^^^^.^ 


.2^ 


.s:j2- 


Note:— In   this   case    no   account   is   kept  with    L.    C.    White.         By     posting     directly    from     this     book    to    the 
credit   side   of   Notes   Receivable   account   in   the   ledger,    it    will    liquidate    this    particular    note's    original    entry. 


52.     I  sell  merchandise  for  a  note. 

Information: — This  note  which  I  now  receivp  was  given  (issued)  by  me  sometime  ago 
for  merchandise  which  I  purchased. 

Remember  when  this  note  was  issued  by  me  it  was  a  note  payable  (to  me).  It  will 
have  to  remain  a  note  payable  even  though  I  receive  it  from  another  party  in  payment  of 
goods. 

Merchandise  performs  the  service  in  that  it  brings  into  my  business  a  Note  Payable, 
therefore  Note  Payable  is  the  result.  According  to  the  rule  the  service  is  credited.  Since 
the  service  is  credited  and  since  merchandise  has  performed  the  service,  it  must  follow  that 
merchandise  must  be  credited.  Again,  according  to  the  rule,  the  result  is  debited.  Since 
the  result  is  debited  and  since  Note  Payable  is  the  result,  it  must  follow  that  Note  Payable 
must  be  debited.     For  entry  see  illustration  No.  49. 


Illustration  No.   49. 


Sales  Book 


^ 


^-^^ 


Yf- 


L.  F. 


.^  /   /OL.tt,.^£^ 


^•^f^ 


Z^^    ^"St^^t-tl^ 


(^  x/y 


_z: 


-4£ 


jr^ 


iL£L^i^.J^^^^^^^=^-^.^i___^,_^^^:^ 


^  / 


/.r 


jbU. 


^LdC 


Note: — In    this    case    the    personal     account    Is    not     kept.      By    posting    directly   from    this    book   to   the    debit 
side    of    Notes    Payable    account    In    the    ledger,    it    will    liquidate   this    particular   note's   original    entry. 


Explanation  of  the  Different  Books  to  be  Kept 

53.  Cash  Book.  This  book  is  divided  into  two  parts,  the  left  side  is  known  as  the 
Debit  and  the  right  side  as  the  Credit  side. 

All  cash  coming  into  your  business  is  a  Result  and  must  be  debited.  This  cash  will 
therefore,  be  placed  on  the  Debit  side  of  the  Cash  Book  and  the  name  of  the  person,  firm, 
corporation  or  thing  which  performs  the  service  will  be  placed  directly  opposite  the  amount 
on  the  same  side. 

All  cash  which  you  pay  out  performs  a  Service  and  must  be  credited.  This  cash  will 
therefore,  be  placed  on  the  Credit  side  of  the.  Cash  Book  and  the  name  of  the  person,  firm, 
corporation  or  thing,  which  is  the  result,  will  be  placed  directly  opposite  the  amount  on 
the  same  side. 

It  will  readily  be  seen  that,  under  ordinary  conditions,  the  debit  side  will  be  larger 
than  the  credit  side  or  equal  to  the  credit  side.  It  would  be  impossible  to  pay  out  more 
money  (credit  side)  than  you  have  received  (debit  side).  An  exception  to  the  above  would 
be  in  the  case  of  an  overdraft. 


26 


The  difference  between  the  Debit  and  Credit  sides  of  the  Cash  Book  will  show  the 
cash  on  hand  or  Cash  Balance.  This  cash  balance  must  always  equal  the  amount  of  cash 
in  your  cash  drawer  plus  the  amount  of  cash  left  in  bank,  as  shown  on  stub  of  your  check 
book.  The  cash  balance  should  be  found  at  the  end  of  each  day.  The  cash  book  need  not 
be  ruled  until  the  end  of  the  month.  For  illustration  of  cash  book  showing  entries  see  il- 
lustration No.  50. 


Illustration  No.   50. 


Cash 


DEBIT    SIDE 


/f- 


^ 


.H 


-^ 


^r^St^^c^^  \^^^^^^^^^<£^^ 


/3 


7\:£^z^;:,!^^trP<C^;a4^^ 


C^H-K^-^A^ i<^g-y^lgg^;»g-^-^g^ 


^/<^*t^.t-^.~^^?'!:z-^ai:^ 


^<p  <?  a 


_-^._Z 


J^ 


y^-j:.^ 


.z_^ 


i^X 


sJl:^ 


<ra  z^ 


-T/^  r^ 


^^/ 


-^^ 


^a. 


JLJ^. 


Cash 


CREDIT  SIDE 


^2^^. 


MJL 


JT^ 


-4^ 


^lA 


^^ 


^^ 


JL^ 


(^^^^-<^-<g---^C:^^^;^>-^^^feg^<^ 


^i'  ^-r  a 


M3- 


':r?^>^  rlr^^ly^^.l^'  Y^^ 


T 


-A^ 


.z^ 


;^^^r:^^^ 


^  ^Jf  ^^^^  ^/''/^f- 


.±j^ 


^^^ 


(^^X'  y^4l»^f>c.^^^^^ 


^/^/  ^^-. 


Z^ 


.^^^.£-^«.^<^j^^^^*^^..^£::^2_t^i^.^^kz^ 


>•?  ^  f 


/^3 


Z^ 


^^^^^Jh^ 


^:.^J^ 


V^^Ar 


M^ 


^^vTj"  y^ 


j^^ 


X/s^/// 


r^ 


ys-  a  "/  a 


^£^ 


54.     Exercises  for  making  entries  into  the  cash  book. 

Instructions: — Obtain  a  number  of  sheets  of  Journal  paper.  Use  the  two  inside  pages 
of  one  sheet  for  a  cash  book.  The  left-hand  page  will  be  the  Debit  side  and  the  right- 
hand  page  will  be  the  Credit  side. 


27 


Note: — Journal  and  ledger  paper  is  very  cheap,  but  if  you  do  not  care  to  invest  in  it 
you  may  draw  a  form  of  the  cash  book  on  blank  paper  using  one  of  the  illustrations  as 
a  model. 

May  1,  1915.     A.  B.  Fowler  pays  you  his  bill  in  full  to  date  $468.20. 

May  2,  1915.     C.  H.  Carroll  pays  you  his  bill  of  April  20,  1915  for  $268.75. 

May  3,  1915.  You  have  in  your  possession  a  note  for  $721.80  which  is  due  today.  You 
collect  the  amount. 

May  5,  1915.     A.  R.  Free  pays  you  his  account  in  full  to  date  $209.70. 

May  7, 1915.     D.  B.  Hill  pays  you  his  bill  of  May  1,  1915  for  $176.00. 

May  8,  1915.     Dean  &  Co.  give  you  $925.00  in  part  payment  of  their  account. 

May  9,  1915.     P.  M.  Trainer  gives  you  $260.00  in  part  payment  of  his  account. 

May  2, 1915.     You  pay  for  stamps,  etc.  $10.00. 

Note: — See  paragraph   11  before  making  this  entry. 

May  2,  1915.    You  give  M.  A.  Ellis  $210.00  in  payment  of  your  invoice  of  May  4,  1915. 

May  4,  1915.     You  give  to  A.  M.  Dennis  $295.00  in  part  payment  of  your  account. 

May  6,  1915.     You  give  to  L.  C.  Merrit  $644.00  in  payment  of  your  account  to  date. 

May  7,  1915.    You  pay  your  note,  which  is  due  today,  for  $420.00. 

May  9,  1915.     You  pay  $13.00  freight  on  goods  which  you  purchased  sometime  ago. 

Note: — Call  this  account  Freight-  When  you  make  the  entry  for  the  $13.00,  in  the 
cash  book,  place  the  word  Freight  directly  opposite  the  amount. 

Find  the  cash  balance  and  rule  the  cash  book  as  per  illustration  No.  50. 

55.  Additional  entries  for  the  cash  book. 

May  12,  1915.     John  Grover  pays  you  his  bill  in  full  to  date  $110.50. 

May  12,  1915.  Wm.  Jones  pays  you  his  bill  of  $463.18  and  you  allow  him  a  2  per  cent, 
discount.    See  paragraph  25. 

May  13,  1915.  Edward  Green  pays  you  his  bill  of  $1219.15  and  you  allow  him  a  5  per 
cent,  discount. 

May  14,  1915.  You  have  in  your  possession  a  note  dated  April  14,  1915,  for  $400.00. 
This  note  is  given  for  60  days.     You  discount  the  note  today. 

May  15,  1915.  You  have  in  your  possession  a  note  dated  March  26,  1915  for  $318.45. 
This  note  is  given  for  120  days  and  is  interest  bearing  at  the  rate  of  6  per  cent.  You  dis- 
count it  today. 

May  12,  1915.    You  owe  Edward  Marks  $43.17.     You  pay  him  this  amount. 

May  13,  1915.  You  owe  John  Wise  $392.16.  You  pay  him  this  amount  and  he  al- 
lows you  a  3  per  cent,  discount. 

May  14,  1915.  You  owe  James  Marsh  $463.00.  You  pay  him  this  amount  and  he  al- 
lows you  a  2  per  cent,  discount. 

May  15,  1915.  You  discount  your  note  which  you  issued  for  $375.25  for  30  days. 
This  note  is  dated  May  11,  1915. 

May  16,  1915.  You  discount  your  note  which  you  issued  for  $416.19  for  90  days.  This 
note  is  interest  bearing  at  the  rate  of  6  per  cent.,  and  is  dated  April  23,  1915. 

Note: — If  in  doubt  as  to  the  application  of  the  rule  for  these  transactions  or  as  to  the 
disposition  of  the  items  in  cash  book,  refer  to  the  paragraph  in  which  they  are  fully  ex- 
plained and  illustrated. 

Find  the  cash  balance  and  rule  the  cash  book  as  per  illustration  No.  50. 

56.  Purchase  Book.  In  this  book  is  kept  the  amount  of  merchandise  purchased,  for  the 
purpose  of  selling,  together  with  any  merchandise  invested  in  the  business  by  the  pro- 
prietor or  proprietors.  Directly  opposite  the  amount  is  placed  the  name  of  the  person,  firm 
or  corporation  from  whom  the  merchandise  has  been  purchased.  The  term  of  purchase 
is  indicated  after  the  name  of  the  person,  firm  or  corporation.  This  book  is  ruled  only  at 
the  end  of  the  month. 

Note: — The  different  items  of  merchandise  which  have  been  purchased  do  not  appear 
in  the  Purchase  Book,  as  they  may  be  readily  obtained  from  the  invoices  which  you  are 
supposed  to  keep  filed. 

For  illustration  of  Purchase  Book  showing  entries  see  illustration  No.  51. 

28 


Illustration   No.    51. 


PURCHASE  Book 


-t:^^^ 


L.  F. 


^^^<£a^^^  ^^::^^^^^^ 


^/yg  —^.f^t.^^  .9 /^ 


^3 


ILJL 


-r^  ^;^j^^  x^  ^^,.«^^  ^  /:  ;^^^y^. 


i^^^>^i^ 


^2.   y^ 


_2_ 


^-.^^^  ^^.A^  2.^:^^jL^..t..^/Z.^Zi^,A. 


^a  .gz^^^g^^t^/^- 


3^-  Z^ 


Cy^^-A^^^^*^   /  X  0  >^^24.^:AtL^g!^^,/^A,^z^,^ 


^^^^jL.  (y:^y^,»^..^<^  >^^ e^^::^^^'»g^^  -Vx/gy  -^^t^^U-  /i,  o 


t^^f 


::^  M^..^^.-.^  i' Ci,^, 


"V>-^  -^>t^/t^  ^  a. 


/  f  r  /^r" 


^ 
^-g-^ 


^<';^'>»*<y-g<.  ^^?^^e^;:^''e3!4y-£^,  ^~/a^. 


^Xx^  -. 


_i^_^ 


/  /  ±. 


r<p  /' 


^JL. 


XJU. 


^7  /. 


57.     Exercises   for  making   entries   into   the   Purchase   Book. 

Instructions: — Use  one  side  of  a  sheet  of  Journal  paper  or  rule  a  blank  paper  similar 
to  the  rulings  shown  in  illustration  No.  51. 

May  5,  1915.     You  buy  from  John  Smith  merchandise  $376.18.     Terms  on  account. 

May  5,  1915.  You  buy  from  William  Jones  merchandise  $264.19.  Terms  note  60 
days. 

May  6,  1915.  You  buy  from  Carl  Bates  &  Co.  merchandise  $264.87.  Terms  note  90 
days. 

May  7,  1915.     You  buy  from  William  Hecker  merchandise  $199.20.     Terms  cash. 

May  8,  1915.  You  buy  from  R.  Rodgers  merchandise  $200.00.  Terms  2  per  cent.  10 
days. 

May  8,  1915.  You  buy  from  William  Watson  merchandise  $500.00.  Terms  2  per  cent. 
10  days,  net  60  days. 

Note: — "Terms  cash"  simply  means  that  cash  will  be  paid  for  the  goods  in  a  few  days, 
probably  as  long  as  from  10  to  30  days.  "Spot  cash"  means  that  cash  is  paid  just  as  soon  as 
the  goods  are  bought. 


58.  Sales  Book.  In  this  book  is  kept  the  amount  of  each  sale  of  merchandise.  Di- 
rectly opposite  the  amount  is  placed  the  name  of  the  person,  firm  or  corporation  to  whom  the 
merchandise  has  been  sold.  The  terms  of  sale  are  indicated  after  the  name  of  the  person, 
firm  or  corporation.    This  book  is  ruled  only  at  the  end  of  the  month. 

Note: — The  different  items  of  merchandise  sold  should  be  placed  into  the  Sales  Book. 

For   illustration  of  Sales  Book  showing  entries  see  illustration  No.  52. 

29 


Illustration   No.    52. 


Sales  Book 


—r^^ 


^<^  j>^&^^-^fLy  J2  j;/a  ^^^x^L^.^.^^^  2/^^,^^)^ 


^>^:^!>^<»»y..rf>   -^//^    ~>^^^£^  si  ^ . 


f  ^tf^.^f^   9(^  /    £.^.^..^ 


^y  JLS-^ 


/  i- 


¥^  J- 


«^/    //^: 


JL 


.A^ 


.^/^  aftfc  <^  -:/^i^^;^!^^^ 


@/  ^j^ 


/  V 


.Z- 


.zA^ 


^.£Li'aJ^^a^.^iL^^;^€^ 


/k^,.*^^^  j^f^C^e^^  a^  A  (fa^it^  : 


^i^M  (^  X?^y^K/ji^ 


J^  Ar^ 


-AJ^ 


r  0 


_<z^ 


^C^^Jj^/  ^Ofy-^-^ 


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30 


59.  Exercises  for  making  entries  into  the  Sales  Book. 

Instructions: — Use  one  side  of  a  sheet  of  Journal  paper  or  rule  a  blank  paper  similar  to 
the  rulings  shown   in  illustration  No.   52. 

May  6,  1915.  You  sell  to  B.  W.  Keene,  200  barrels  B.  C.  Flour  at  $4.10  per  barrel. 
Terms  note  at  2  months. 

May  7,  1915.  You  sell  to  Garland  &  Co.,  100  barrels  of  S.  Flour  at  $4.00  per  barrel,  and 
300  bushels  of  Rye  at  57c  per  bushel.      Terms  on  account. 

May  8,  1915.  You  sell  to  H.  Dennis,  50  barrels  C.  Flour  at  $4.75  per  barrel,  and  200 
bushels  of  Rye  at  60c  per  bushel.    Terms  cash. 

May  9,  1915.  You  sell  to  A.  B.  Frey,  50  barrels  of  D.  Flour  at  $4.60  per  barrel,  and 
300  bushels  of  Oats  at  36c  per  bushel.     Terms  note  at  20  days. 

May  10,  1915.  You  sell  to  S.  C.  Rose,  75  bushels  Rye  at  57c  per  bushel.  Terms  2  per 
cent  10  days,  net  30  days. 

60.  Notes  Receivable  Book.  All  notes  received  and  all  drafts  accepted  by  others  in 
your  favor  will  be  placed  into  this  book.    See  illustrations  Nos.  8,  30,  31. 

61.  Notes  Payable  Book.  All  notes  which  you  issue  and  all  drafts  which  you  ac- 
cept will  be  placed  into  this  book.     See  illustrations  Nos.  5,  29. 

62.  Journal.  This  book  receives  only  such  entries  which  are  excluded  from  the  other 
books.    See  illustrations  Nos,  1,  28,  32,  36,  37,  38,  39. 

63.  Exercises  for  entering  drafts. 

Note: — You  will  make  only  such  entries  which  effect  your  books. 

Instructions: — Use  page  one  of  a  sheet  of  Journal  paper  for  a  Journal,  pages  2  and  3 
for  a  Cash  Book.  You  will  be  able  to  buy  a  combination  Notes  Receivable  and  Notes 
Payable  Book  for  a  few  cents ;  if  you  do  not  care  to  make  this  investment  rule  on  blank 
paper  a  Notes  Receivable  Book  similar  to  illustration  No.  8  and  a  Notes  Payable  Book 
similar  to  illustration  No.  5. 

Important.  Be  sure  to  draw  up  forms  of  these  drafts  on  blank  paper,  and  write  the 
acceptance  across  the  face  in  red  ink  where  such  acceptances  are  indicated  as  having 
been  made. 

May  6,  1915.  William  C.  Hecker  of  Pittsburg,  Pa.,  has  accepted  your  draft  dated 
May  5,  1915,  at  ?ight,  in  favor  of  R.  Hoe  &  Co.,  for  $260.00. 

May  7,  1915.  Edward  E.  Wells  of  Baltimore,  Md.,  has  drawn  on  you  a  draft  dated 
May  5,  1915,  at  sight,  in  favor  of  James  Gordan  &  Co.,  for  $450.00. 

Note: — While  a  sight  draft  does  not  necessarily  have  to  be  accepted,  you  will  accept 
this  one. 

May  8,  1915.  You  have  received  a  sight  draft  drawn  by  A.  Wharton  &  Co.,  of  Boy- 
ton,  N.  J.,  on  Samuel  Nester,  of  York,  Pa.,  in  favor  of  Yourself.  The  draft  is  dated  May 
6,  1915,  and  is  for  $175.00. 

May  9,  1915.  You  draw  a  sight  draft  on  Alvin  Nolles,  of  Bayonne,  N.  J.,  in  favor  of 
Yourself,  for  $400.00.    The  draft  is  dated  May  7,  1915. 

May  10,  1915.  H.  B.  Calvin,  of  Orange,  N.  J.,  draws  a  sight  draft  on  you  in  favor  of 
himself  for  $150.00.     The  draft  is  dated  May  8,  1915. 

Note:— You  will  accept  this  draft. 

May  12,  1915.  You  owe  D.  P.  Dalton  $420.00  and  in  payment  you  give  him  a  draft 
drawn  on  H.  C.  Shultz,  Harrisburg,  Pa.,  at  10  days  after  date.  Shultz  accepts  the  draft. 
It  is  dated  May  10,  1915. 

May  13,  1915.  E.  D.  Monroe,  Wrightsville,  Pa.,  draws  a  draft  on  you  at  30  days 
after  date.  The  draft  is  in  favor  of  Simpson  Bros.  You  accept  the  draft  which  is  for 
$650.00.     It  is  dated  May  12,  1915. 

May  13,  1915.  You  receive  from  C.  P.  Roe,  York  Haven,  Pa.,  a  draft  dated  May 
12,  1915,  at  20  days  after  date.  The  draft. is  drawn  on  John  Kirk,  Syracuse,  N.  Y.,  who 
has  accepted  it. 

31 


May  14,  1915.  James  Donlay  draws  a  draft  on  you  in  favor  of  himself  at  30  days  sight 
for  $200.00.    The  draft  is  dated  May  13,  1915.  You  accept  the  draft  May  14,  1915. 

May  15,  1915.  You  draw  a  draft  on  B.  A.  Wells,  Passaic,  N.  J.,  for  $150.00.  The 
draft  is  drawn  for  20  days  sight.     It  is  in  favor  of  Yourself  and  is  dated  May  14,  1915. 

May  16,  1915.  You  owe  James  Martin  on  account.  You  give  him  the  draft  of  B.  A. 
Wells.  (This  draft  was  drawn  by  you  on  Wells  May  15,  1915).  Martin  gives  you  cred- 
it for  the  face  value  of  the  draft. 

Note: — When  Wells  accepted  this- draft  it  became  a  Note  Receivable  to  you.  When 
you  give  it  to  Martin  Remember  that  it  still  remains  a  Note  Receivable  to  you. 

Work  for  the  Student 

64.  Instructions : — Provide  yourself  with  six  sheets  of  Journal  paper.  Place  them  in- 
side of  each  other  so  that  they  will  resemble  a  book.  Beginning  with  the  outside  page, 
number  them  consecutively  from  one  up  to  twelve.  At  the  top  of  page  one  write  Journal; 
page  two.  Cash;  page  three,  Cash;  pages  four,  five  and  six,  Purchase  Book;  pages  seven, 
eight  and  nine  Sales  Book. 

Where  the  single  column  appears  on  the  left  of  each  page  you  will  draw  another  line 
beside  it  at  the  right  thus  forming  another  column.  Use  red  ink  in  making  this  line.  For 
a  very  few  cents  you  will  be  able  to  purchase  a  combination  Notes  Receivable  and  Notes 
Payable  book.  If  this  investment  is  not  desired,  you  will  rule  a  Notes  Receivable  Book  as 
per  illustration  No.  8  making  about  ten  cross  lines.  You  will  also  rule  a  Notes  Payable 
Book  as  per  illustration  No.  29,  making  about  ten  cross  lines.  Provide  yourself  with  a 
check  book.  Provide  yourself  with  seven  sheets  of  Ledger  paper.  Place  them  inside  of  each 
other  so  that  they  will  resemble  a  book.  Beginning  with  the  outside  page,  number  them 
consecutively  from  one  up  to  fourteen. 

September  1,  19 — 

65.  You  begin  business  today.  The  kind  in  which  you  will  engage  is  the  Produce 
business.  You  will  handle  such  goods  as  eggs,  butter,  fruits,  poultry,  etc.  You  will  keep 
your  own  books.  You  invest  in  this  business  the  following : — Cash  $5000 ;  Real  Estate 
$3000;  Horse  and  Wagon  $400.     See  paragraph  13  and  illustration  No.  1. 

Note: — The  $5000  are  already  in  the  Student's  Bank.  The  Receiving  Teller  has  en- 
tered this  amount  in  your  Bank  Pass  Book.  See  illustration  No.  53.  You  will  place  the 
$5000  on  the  stub  of  your  Check  Book.    See  illustration  No.  54. 


Illustration  No.  53. 


Bank  Pass  Book 


BANK   IN  ACCOUNT 

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32 


Illustration  No.   54. 


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66.  You  buy  from  A.  R.  Black,  45  Market  St.,  York,  Pa.,  the  following  merchandise: 
—1  tub  C.  Butter  100  lb.  @  30c ;  1  crate  No.  1  Eggs,  12  doz.  @  40c ;  1  crate  No.  2  Eggs,  12 
doz.  @  23c;  1  tub  R.  Lard  50  lb.  @  12>4c.    Terms  2/10— net  30. 

Note: — The  symbol  (#)  placed  after  a  number  indicates  pounds.  Placed  before  a 
number,  it  indicates  number.  Terms  2/10 — net  30  means  2  per  cent,  discount  if  paid  within 
10  days  or  the  full  amount  if  not  paid  until  after  10  days  but  within  30  days. 

See  paragraph  14  and  illustration  No.  2. 

September  2,  19 — 

67.  You  buy  from  R.  U.  Wise,  16  A  Street,  N.  E.,  Washington,  D.  C,  the  following 
merchandise: — 75  pairs  #  1  Squabs  @  45c;  30  pairs  #  2  Squabs  @  30c.  Terms  cash. 
See  paragraph  47. 

You  buy  from  S.  G.  Cella,  2  Richland  Ave.,  York,  Pa.,—  15  bunches  Bananas  @  $1.40; 
5  boxes  Oranges  @  $2.10;  1  box  Grape  Fruit  @  $4.25.     Terms  note. 

You  buy  from  O.  T.  House,  120  Philadelphia  St.,  New  Oxford,  Pa.:— 150  crates  #  1 
Eggs  @  20>^c.     Terms  1/10— net  60. 

You  buy  from  W.  Wright  &  Co.,  Hanover,  Pa. :— 120  bu.  New  Potatoes  @  $1.10;  90  bu. 
Old  Potatoes  @  73>^c.     Terms  2/15— net  30. 

You  buy  from  A.  J.  Lynn.  La  Bott,  Pa. :— 30  crates  #  2  Eggs,  12  doz.  @  13i4c;  3  tubs 
C.  Butter  360#  @  18c.    Terms  3/  10— net  30. 

68.  You  will  make  out  a  check  in  favor  of  R.  U.  Wise,  for  his  invoice  of  September 
2,  1915.  Deduct  this  amount  from  the  stub  of  the  check  book.  See  illustration  No.  54. 
Make  an  entry  for  this  transaction  from  the  Check  Book  Stub  into  the  Cash  Book.  See 
paragraph  20  and  illustration  No.  9.  Do  not  forget  to  deduct  this  amount  on  the  stub  of 
the  Check  Book. 

September  3,  19 — 

69-  You  sell  to  A.  C.  Gregg,  240  Market  St.,  York,  Pa.,  the  following  merchandise : — 
8  doz.  #  1  Eggs  @  25c;  12  doz.  #  2  Eggs  @  18c;  50#  C.  Butter  @  28c.  Terms  2/10— net 
30.    See  paragraph  17  and  illustration  No.  6. 

70.  You  sell  to  James  Hecker,  382  Market  St.,  Lancaster,  Pa. :—  60  #  C.  Butter  @ 
28c;  112  doz.  #  1  Eggs  @  25c;  72  doz.  #  2  Eggs  @  19c;  30  bu.  Old  Potatoes  @  8814c;  22 
bu.  New  Potatoes  (a)  $1.143/4c;  15  pairs  #  1  Squabs  @  63c;  7  pairs  #  2  Squabs  @  48c;  5 
bunches  Bananas  @  $1.65;  1  box  Oranges  @  $3.12;  8  Grape  Fruits  @  13  l-3c.  Terms  draft 
at  20  days  after  date. 


33 


You  sell  to  Stough  &  Musser,  Front  St.,  Harrisburg,  Pa. : — 2  boxes  Oranges  @  $3.09. 
Terms  cash. 

You  sell  to  D.  Barrett,  19  King  St.,  Lancaster  St.,  Lancaster,  Pa. : —  3  bunches  Banan- 
as @  $1.70;  12  Grape  Fruit  @  12c;  5  crates  #  1  Eggs  @  $3.00.     Terms  2/10— net  30. 

You  sell  to  S.  B.  Wentz,  206  Frederick  St.,  Hanover,  Pa. : — 20  pairs  #  1  Squabs  @ 
60c ;  3  pairs  #  2  Squabs  @  45c.    Terms  2/10 — note  30. 

You  sell  to  Edw.  T.  Lippy,  1260  Chestnut  St.,  Philadelphia,  Pa. :— 75  #  C.  Butter  @  28c. 
Terms  2/10— net  30. , 

7L  You  give  to  S.  D.  Cella  your  note  in  payment  of  the  invoice  of  goods  purchased 
from  him  September  2,  19 — .  Your  note  is  dated  September  3,  19 — ,  and  is  given  at  30 
days.    For  form  of  note  see  illustration  No.  4. 

Explanation: — In  this  case  Note  Payable  performs  the  service  in  that  it  liquidates  your 
indebtedness  to  S.  D.  Cella,  therefore  the  liquidation  of  S.  D.  Cella's  account  is  the  result. 
According  to  the  rule  the  service  is  credited.  Since  the  service  is  credited  and  since 
Note  Payable  has  performed  the  service,  it  must  follow  that  Note  Payable  must  be  credit- 
ed. Again,  according  to  the  rule,  the  result  is  debited.  Since  the  result  is  debited  and 
since  the  liquidation  of  Cella's  account  is  the  result,  it  must  follow  that  S.  D.  Cella's  ac- 
count must  be   debited. 

Note: — It  will  be  noticed  that  in  this  case  the  personal  account  is  kept.  While  in  the 
case  cited  in  paragraph  16  the  personal  account  is  not  kept.  No  other  entry  is  required 
for  this  transaction  except  one  in  the  Note  Payable  Book  for  the  note.    See  illustration  No.  5. 

September  4,  19 — 

72.  You  will  make  out  a  check  for  $75  to  cover  three  month's  rent.  This  rent  is  in 
advance,  and  is  on  the  building  in  which  you  are  carrying  on  the   Produce  Business. 

Make  out  this  check  to  Joseph  Jenkins. 

Note: — In  applying  the  rule  and  making  the  entry,  you  will  have  nothing  to  do  with 
Joseph  Jenkins,  as  you  do  not  wish  to  keep  an  account  with  him. 

Read  paragraph  11-c,  also  note  concerning  Expense  and  Example  of  Subdivided 
Expense  Account,  Read  paragraph  31.  For  entry  see  illustration  No.  25.  Remember 
this  item  could  be  called  Rent  as  it  is  a  subheading  of  Expense.  Do  not  forget  to  deduct 
this  amount  on  the  stub  of  the  check  book. 

73-  Important.  All  entries  into  the  cash  book,  for  cash  paid  out  by  check,  are  made 
from  the  stubs  of  the  check  book.  Each  check  issued  is  deducted  from  the  balance  of 
cash  as  shown  on  the  check  book  stub. 

74.  You  will  make  a  check  for  the  following  items  which  you  bought  today : — 1  Desk 
$40;  3  Chairs  $8.50;  1  Clock  $5.00;  1  set  Files  $5.00. 

Make  out  this  check  to  Wm.  Dougherty. 

Note: — In  applying  the  rule  and  making  the  entry,  you  will  have  nothing  to  do  with 
Wm.  Dougherty,  as  you  do  not  wish  to  keep  an  account  with  him. 

Note: — These  items  will  be  known  as  Furniture  and  Fixtures  which  is  a  subheading 
of  Expense.  Remember  in  applying  the  rule,  to  say  that  Furniture  and  Fixtures  is  the  re- 
sult instead  of  Expense.  '    ''^''^ 

This  transaction  necessitates  the  writing  of  a  check  and  making  an  entry  into  the 
Cash  Book.  Be  sure  to  place  this  transaction  on  the  proper  side  of  the  Cash  Book.  See 
illustration  No.  25. 

75.  You  will  issue  a  check  for  the  freight  and  drayage  on  the  Desk,  Chairs,  etc.  The 
amount  of  this  check  is  $9.27. 

(a)  Note: — This  item  will  be  known  as  Freight  and  Drayage  which  is  a  subheading 
of  Expense. 

34 


Remember  in  applying  the  rule,  to  say  that  Freight  and  Drayage  is  the  result  instead  of 
Expense. 

Make  out  this  check  to  The  Hutton  Transfer  Co. 

(b)  Note : — In  applying  the  rule  and  making  the  entry,  you  will  have  nothing  to  do  with 
The  Hutton  Transfer  Co.,  as  you  do  not  wish  to  keep  an  account  with  them. 

September  5,  19 — 

76.  You  receive  from  C.  A.  Gregg  a  check  in  payment  of  the  merchandise  sold  him 
September  3,  19 — . 

Read  paragraph  25.  See  illustration  Nos.  15-16.  Be  sure  to  read  Definition  for  Mer- 
chandise Discount  in  paragraph  24. 

September  6,  19 — 

77.  You  receive  from  Stough  and  Musser  a  check  in  payment  of  the  merchandise  sold 
them  September  3,  19 — . 

78.  You  will  issue  a  check  to  O.  T.  House  in  payment  of  the  merchandise  bought 
from  him  September  2,  19 — .     Read  paragraph  24.     See  illustrations  Nos.   13-14. 

79.  You  receive  from  Samuel  B.  Wentz  his  note  to  cover  the  amount  of  the  mer- 
chandise which  you  sold  him  September. 3,  19 — .  The  note  is  dated  September  4,  19 — ^ 
and  is  issued  at  thirty  days.     For  form  of  note  see  illustration  No.  4. 

Explanation: — In  this  case  Samuel  B.  Wentz  performs  the  service  in  that  he  brings 
into  my  business  a  Note  Receivable,  therefore  Note  Receivable  is  the  result.  According  to 
the  rule  the  service  is  credited.  Since  the  service  is  credited  and  since  Samuel  B.  Wentz 
has  performed  the  service,  it  must  follow  that  Samuel  B.  Wentz  must  be  credited.  Again 
according  to  the  rule,  the  result  is  debited.  Since  the  result  is  debited  and  since  Note 
Receivable  is  the  result,  it  must  follow  that  Note  Receivable  must  be  debited. 

Note: — It  will  be  noticed  that  in  this  case  the  personal  account  is  kept.  While  in  the 
case  cited  in  paragraph  19  the  personal  account  is  not  kept.  No  other  entry  is  required  for 
this  transaction  except  one  in  the  Note  Receivable  Book  for  the  note.    See  illustration  No.  8a. 

80.  You  receive  from  Edw.  T.  Lippy  a  check  in  payment  of  the  merchandise  sold  him 
September  3,  19 — . 

Do  not  forget  the  Merchandise  Discount. 

You  receive  from  D.  Barrett  a  check  in  payment  of  the  merchandise  sold  him  Septem- 
ber 3,  19—. 

Do  not  forget  the  Merchandise  Discount. 

Note: — Whenever  you  receive  a  check  for  merchandise  sold,  always  refer  to  the  Sales 
Book  in  order  to  ascertain  the  terms  of  the  sale  for  which  the  money  is  received.  Com- 
pute the  amount  of  Merchandise  Discount  (if  any),  deduct  this  amount  from  the  gross 
amount  of  the  bill  as  shown  in  the  Sales  Book.  Compare  this  result  with  the  amount  of  the 
check. 

81.  You  will  draw  (make  out)  a  draft  for  the  merchandise  sold  to  James  Hecker  on 
September  3,  19 — .  Use  the  following  data  in  making  out  this  draft :  Twenty  days  after 
date  (see  terms)  ;  payable  to  the  order  of  Myself  (payee) ;  amount  same  as  given  in 
Sales  Book;  drawer   (your  name);   drawee  James  Hecker. 

Be  sure  to  refer  to  illustration  No.  27b  before  you  draw  this  draft. 

Note : — No  entry  will  be  made  for  this  draft  at  this  time,  except  a  memorandum  in  the 
Journal  showing  that  the  draft  was  drawn.  This  memorandum  is  never  "Posted."  The 
Amount  is  not  extended  into  the  money  column.     See  illustration  No.  61. 

Important.  No  entry  should  be  made  by  any  party  to  a  time  draft  except  a  memor- 
andum by  the  Drawer,  until  the  instrument  is  accepted,  which  makes  it  a  note,  and  then  an 
entry  should  be  made  by  each  party.    In  the  case  of  a  sight  draft,  only  the  memorandum 

35 


will  be  made  by  the  Drawer,  until  the  instrument  is  "honored"   (paid)  by  the  Drawee,  at 
which  time  an  entry  should  be  made  by  each  party. 

Remember: — The  sight  draft  need  not  be  accepted. 

82.     You  receive  from  D.  Barrett  a  check  in  payment  of  the  merchandise  sold  him 
September  3,  19 — . 

Do  not  forget  to  deduct  the  Merchandise  Discount. 
Proceed  as  in  paragraph  76. 


83.  You  will  now  deposit  all  cash  on  hand,  that  is  you  will  put  it  into  the  Student's 
Bank  where  you  have  already  deposited  $5000.  Rule  a  deposit  slip  similar  to  illustration  No. 
55.  Following  are  the  checks  which  you  have  received:  C.  A.  Gregg,  $17.80;  Stough  and 
Musser,  $6.18;  Edw.  T.  Lippy,  $20.58;  D.  Barrett,  $21.11.    Total  checks,  $65.67. 

Important.  In  actual  business,  these  checks  would  be  endorsed  by  you  by  writing 
your  name  across  the  back  of  each.  See  illustration  No.  43.  You  would  then  take  these 
checks  and  the  deposit  slip  together  with  your  Bank  Pass  Book  to  the  bank  where  the  Re- 
ceiving Teller  would  take  the  deposit  and  place  the  amount  of  it  in  the  Pass  Book,  return- 
ing the  Bank  Pass  Book  to  you  again.  For  illustration  of  Bank  Pass  Book  and  entry  made 
in  it  by  Receiving  Teller  see  illustration  No.  53,  From  the  Bank  Pass  Book  you  would 
make  an  entry  of  the  deposit  to  the  stub  of  yoyr  check  book,  adding  the  amount  to  the 
bank  balance. 

For  illustration  showing  the  deposit  entered  on  stub  of  check  book  and  added  to  bank 
balance  see  illustration  No.  54. 

You  will  now  enter  the  amount  of  your  deposit  ($65.67)  on  the  stub  of  your  check 
book  and  add  it  to  your  bank  balance. 


Illustration  No.   55. 

Deposit  Slip 


DEPOSITED 

IN 

STUDENT'S    Bank 

By 


McKeesport,    Pa.  <^^^  ^^ /f- 


Currency 


Checks 


36 


84.  You  will  now  balance,  rule  and  prove  the  Cash  Book.  Find  the  sum  of  the  fig- 
ures on  the  debit  side  and  the  credit  side.  .Subtract  the  sum  of  the  figures  on  the  credit 
side  from  the  sum  of  the  figures  on  the  debit  side.  The  result  of  this  subtraction  will  equal 
the  Cash  on  Hand  or  the  Balance. 

Be  sure  to  read  paragraph  53. 

Proof  of  Cash  Balance: — Find  the  balance  of  cash  in  bank  (check  book  balance).  Add 
to  this  amount  all  cash  not  deposited  (up  to  this  point  all  cash  has  been  deposited).  The 
sum  of  these  items  should  equal  the  Cash  on  Hand  or  Balance  of  the  Cash  Book. 

If  your  cash  book  is  correct,  it  will  be  the  same  as  illustration  No.  56.  Illustration 
No.  56  will  also  show  the  rulings. 

Note: — All  rulings  are  generally  made  in  red  ink. 


Illustration  No.   56. 


Cash 


DEBIT    SIDE 


-vi:: 


^ 


=£:^2^^2^lJ^^^^it-^i=6?^ 


-j^^^»^^-»-..^l^ 


C^z^xy-z^^^.^ 


Cf^.  C  ^. -^^.^L^r^f^^a^ 


^^=J<^*t^.^r<^-f^^r^ 


'-?^^::SL^-^#- 


'3   /  /f- 


^2:t:.S^^^^-:^.4^ 


^^  a  ^ 


/  f 


ju:»^ 


JLJL 


-<£^^^ 


C^^:^..*£,^^~-'i^■^!^,.'rLA 


■  -T/^  r/7 


^r 


^/^^/^ 


J^. 


Cash 


CREDIT  SIDE 


zf 


^^^ 


MJL 


7^-^ 


^ 


/  2. 


-P^ 


A^    /  X 


r^^;.^^^:^^Ke^^ 


^f  ^'T  a 


M:. 


MS. 


"^z:^^  rl^^yt-r-^-'^  K^xZ^ 


T 


-^ 


.A_Z 


-jjC 


M^ 


^^^^€^k<i^<'.r^&^^^^«>^^^^^  (7^.  ^-<^  '^^^^  V.tAf' 


A-£^ 


^^^ 


C}^\r/^-  P/i'^f^^^.-^^ 


'^/-i,/  z^- 


■•?  <^  f 


^^f^.„^U^^^.^..o^^,^^t^'-  ^:/ff.  U2^^^  ^/^A<r. 


/l^f^ 


%///- 


//^ 


.6^2= 


^iS-^  y^ 


r^ 

^^^ 


37 


85.  If  your  check  book  is  correct  it  will  contain  the  following: — Deposits  $5000  and 
$65.67.  Checks  issued:— R.  U.  Wise  $42.75,  Expense  (Rent  paid  to  Joseph  Jenkins)  $75.00, 
Furniture  and  Fixtures  (Wm.  Dougherty)  $58.50,  Freight  and  Drayage  (The  Hutton 
Transfer  Co.)  $9.27,  O.  T.  House  $365.31.    The  check  book  balance  should  be  $4514.84. 


86-     If  your  Purchase   Book  is  correct  it   will   be   the   same   as   illustration   No.   57. 
Illustration  No.  57  will  also  show  the  rulings. 


Illustration  No.  57. 


PURCHASE  Book 


s^^d^ 


/_ 


L.  F. 
■     / 


^^^^A=^^  ^^^^^^^^  .^Jy^^.y^. 


ir. 


y^:!^£.^i<f<*<r..y^   ^/yg  —^-^t,^^  ^? ^ 


^3 


.^^ 


_^=_ 


^^  9Xi^^u^  yr.  ^^^  ;^  /:_  u^^^j^.. 


e-t^:<*C< 


^Z  /'^ 


/    .-<r^^  ^..A^a:^  2,  ^;:^^^^^f^-<^^^^/:^^^?^^^ag=^>^ 


^a  ^a;:^<g>gig:«^^ 


-^ 


.:3^L?^i^ 


Cy^  ^':4'i!^^-t,^..^L^^    /  X  0  ^'^g.t^^z^ea^^^^k^^^l^^z.-.^^^ 


^^^^^  <V^hy^U^^.,g»^  >^-^ frz/^^t^L^*^^.^^  '^/yg  -T^^-^t^  /^  a 


<S  ^f 


^  ^^^>t^^>^2..A^  ;^  c2^^   ^/lo^^fS'^t^^^,^'-^^^ 


fe<:^<^<>gig<^!^^-V>>r"  -v<»<-<g^  .r^  a 


/  f  r  /k:^- 


<^  Jt^  ^:?^i^t-^t'^t^ .  !>^-^>;^^^3?4>-£fe^   ^~/a^ 


§^ 


^yyg  -, 


t^^. 


/  /  ±. 


^^  / 


£JL. 


^^/ 


dA. 


If  your  Sales  Book  is  correct  it  will  be  the  same  as  illustration  No.  58.     Illustration 
No.  58  will  also  show  the  rulings. 


38 


Illustration  No.   58. 


Sales  Book 


— -r:^^^L 


^1_ 


^^.  ^^^.^^    2  x/^..^.»^^^.^^^^^^>^>^ 


■^/y^^   -..a^g-^g^^  s^  «gy  ■ 


^^<^ 


(^/    /i^ 


vli^ 


.^/7  .^    <^  -/^^.^^^tR^^^ 


(@/    ^^ 


/  ^ 


..^^^ 


..^^ 


y  J^^.^.^^.^^'rA^^^^^^j'x.^'^^^.,^^;^ 


..^c^A^.^Zk^'^, /^^    /^^..sf^.^/^  <f^i<tx^A  a^  A  i' ^^*i^.. 


/i^a^tt'  <^  X2^.^>tt:t<^ 


(g>.  ^^.^ 


vLjI 


_Z_^ 


^j^X-^sC^  ??^/  (Cy-^t^^ 


(g-  ^^ 


-^L^, 


v?^ 


-?»i^^ 


-^   ^^^ 


_ZX 


.^1^ 


■^>^-.^^:L^/2:^gL^.^^:^^gU.g<^ 


(3  /y^^ 


_-^^ 


.^£Z_ 


/^  ^.^^tSC-^..,^  ^^  ^rz/!^.,^.*^ 


6.   ^x:^^^^^^^^^^^^^^^^^ /^;^^^^y-<^  ^s*^^ 


^^^ 


^^  /  /y 


(^.yjL^ 


*/¥ 


(g-^C 


AcT 


cTV 


_^ 


a-^;^*^at.*^  ^^^  /  —^^tm^^-tr-^-^ 


(^-/jaeJ- 


/  ^^ 


•?»^^ 


^^^^^ 


-^ 


^crT" 


/>^ 


^  t^ 


-X 


;r>ir>^  ^  XEwt-^:^^.^^ ^_(^jlj:^ 


\lj0jt^'^ 


JL/ 


-X^ 


^    /^ 


4=^ 


39 


If  your  Notes  Payable  Book  is  correct  it  will  be  the  same  as  illustration  No.  59. 


Illustration  No.  69. 


NOTES 


NO. 


WHEN 
GIVEN 


DRAWER  (draft) 

OR 
ENDORSER  (note) 


IN  WHOSE  FAVOR 

(payee) 


FOR  WHAT 
GIVEN 


WHERE  PAYABLE 


-x^. 


^L.^^  .<^2^*.^^**^^i>^ 


PAYABLE 

DATE 

TIME 

WHEN  DUE 

L.F. 

AMOUNT 

DISPOSITION 

WAR 

MONTH 

DAY 

TUB 

Jan. 

Feb.  Mar. 

Apr. 

M»y 

Jon* 

July 

Aug. 

Sept 

Oct 

Not. 

Dee. 

AMOUNT 

DATE 

REMARKS 

^^ 

..^^^lo^ 

'   ,^ 

.^^^ 

^yf- 

s? 

2. 

.^^•Tc^ 

— '-ar- 

S 

^j^r-r 

- 

I 

f  your 

N( 

5tes  r 

'ecei 

va 

)le 

B( 

)ok 

is 

CO 

rre 

Ct 

it  A 

A^il 

b 

t  t 

le  i 

same 

as 

II                 II 

illustration  No.  60. 

Illustration  No.   60. 


NOTES 


NO. 


WHEN 
RECEIVED 


DRAWER  (draft) 

OR 
ENDORSER  (note) 


IN  WHOSE  FAVOR 

(payee) 


DRAWEE  (draft) 
OR 
MAKER  (note) 


FOR  WHAT 
RECEIVED 


WHERE  PAYABLE 


/^ 


■  ^^.c^  '^^at^^rt^  -</4t,^**^/&9^c*i^   <;?^*^8^  .%» //f- 


•7fc:^-^.,,»-.,x->'.,>-.^^yJ^>6jig. 


1 

RECEIVABLE 

DATE           1 

TIME 

WHEN  DUE 

L.F. 

AMOUNT 

DISPOSITION 

YEAR 

month 

DAY 

TEiR 

Jan. 

Feb. 

Mar. 

Apr. 

May 

Jane 

July 

Auft- 

Sept 

Oct 

K07. 

Sec. 

AMOUNT 

DATE 

REMARKS 

y^- 

Jr^ 

v 

,iA4£t, 

V 

2. 

X.4 

•34. 

, 

^ 

/^ 

JS 

J 

If  your  Journal  is  correct  it  will  be  the  same  as  illustration  No.  61. 


Illustration  No.  61. 


JOURNAL 


// 


-JjL 


~^X-^f-^    <Z<^-^.^^ ^/ii*t^>e^..^^^^..f^ 


7^^..^   f^P^ 


3  4^  0  O 


y/ao 


\^  y/a  o 


40 


^f-    L.  F. 


x^^-.^^^ 


uL. 


.jLZ. 


JOURNAL 


J  <7  a  a 


^^g^g>^>'^^  •'^!fag<»<»g-.<g^ 


^^a  ^  a 


AJL 


1^.,.'i^'9A 


<^^s,^-^t^ 


^5zi^*x^eA,£.d.^:£,-^^-. 


^<?  0. 


^^a^^^^^-L^  /ZiSt^^f-^'L,^^ 


j^a  a 


Note: — The  Journal  may  be  kept  In  either  of  the  two  ways  shown   here. 

87.  Definition  of  Posting: — Transferring  all  items  from  the  original  books  of  entry 
(Journal,  Purchase  Book,  Sales  Book,  and  Cash  Book)  to  their  respective  accounts  in  the 
Ledger.     For  definition  of  account  read  paragraph  10. 

Remember  that  all  items  which  are  debited  in  the  original  books  of  entry,  are  debited 
in  their  respective  accounts  in  the  Ledger,  and  that  all  items  which  are  credited  in  the 
original  books  of  entry  are  credited  in  their  respective  accounts  in  the  Ledger. 

Important.  The  left-hand  side  of  an  account  is  the  Debit  side,  and  the  right-hand 
side  is  the  Credit. 

88.  Definition  of  Ledger: — The  Ledger  is   the  Final   Book   of   Accounts.     In    it   are 

grouped,  under  their  appropriate  titles,  all  of  the  debit  and  credit  items  from  the  original 
books  of  entry.       See  illustration  No.  62  for  Ledger  Account. 


Illustration  No.   62. 


89.  Journal  Postings.  Turn  to  the  first  transaction  in  the  Journal.  Write  the  words 
Real  Estate  in  the  Ledger.  See  illustration  No.  63.  In  the  Date  columns  of  the  Ledger 
account,  on  the  debit  side,  write  Sept.  1,  19 — .  (See  illustration  No.  63.)  (This  is  the  date 
of  the  transaction  as  it  appears  in  the  Journal).  In  the  Folio  column  (see  illustration  No. 
62)  in  the  Ledger  account,  write  the  number  of  the  Journal  page  from  which  the  item  is 
taken.    Place  the  amount  ($3000)  in  the  Debit  money  column  of  the  Ledger  account.     (See 


41 


illustration  No.  63.)  In  the  Folio  column  of  the  Journal  place  the  number 
of  the  Ledger  page  on  which  you  have  put  the  Real  Estate  account.  (See  illustration  No. 
61.)  About  eight  lines  below  the  Real  Estate  account,  write  your  name.  (See  illustration 
No,  64.)  In  the  Date  columns  of  the  Ledger  account,  on  the  credit  side  write  Sept.  1,  19 — . 
(See  illustration  No.  64.)  (This  is  the  date  of  the  transaction  as  it  appears  in  the  Journal.) 
In  the  Folio  column  (see  illustration  No.  62),  in  the  Ledger  account,  write  the  number  of 
the  Journal  page  from  which  the  item  is  taken.  (See  illustration  No.  64.)  Place  the  amount 
($3000)  in  the  Credit  money  column  of  the  Ledger  account.  (See  illustration  No.  64.)  In 
the  Folio  column  of  the  Journal  place  the  number  of  the  Ledger  page  on  which  you  have 
put  your  account.     (See  illustration  No.  61.) 


Illustration  No.    63. 


^^^^^^^S^^zk^ 


<1^^^ 


^ 


^_^ 


Remember  that  all  Journal  items  are  posted  to   their   respective   Ledger  accounts   in 
the   manner   indicated   in   this   paragraph. 

You  will  now  post  the  remaining  Journal  items. 


Illustration  No.   64. 


^A^. 


Vf" 
z 


90.  Purchase  Book  Postings.  Turn  to  the  first  invoice  of  merchandise  purchased. 
Write  the  name  of  A.  R.  Black  together  with  his  address  in  the  Ledger.  (See  illustration 
No.  65.)  On  the  credit  side  of  the  Ledger  account,  in  the  Date  columns,  write  Sept.  1, 
19 — .  (See  illustration  No.  65.)  (This  is  the  date  of  the  transaction  as  it  appears  in  the 
Purchase  Book.)  In  the  Folio  column  (see  illustration  No.  62)  in  the  Ledger  account, 
write  the  number  of  the  Purchase  Book  page  from  which  the  item  is  taken.  (See  illustra- 
tion No.  65.)  Place  the  amount  ($43.81)  in  the  Credit  money  column  of  the  Ledger  ac- 
count. (See  illustration  No.  65.)  In  the  Folio  column  of  the  Purchase  Book  place  the  num- 
ber of  the  Ledger  page  on  which  you  have  put  A.  R.  Black's  account.  (See  illustration 
No.  57.) 

Remember  that  all  Purchase  Book  items  are  posted  to  their  respective  Ledger  accounts 
in  the  manner  indicated  in  this  paragraph. 

You  will  now  post  the  remaining  Purchase  Book  items. 

Posting  of  Total  of  Purchase  Book.  Find  the  total  of  the  Purchase  Book.  (See  illu- 
stration No.  57.)  Post  this  amount  to  the  debit  side  of  Merchandise  account  in  the  Ledger. 
(See  illustration  No.  66.) 


Illustration  No.  65 


^^ 


2^^d^^^:^^^ 


z^r^^t-o^.^y^^ 


.  ^4^- 


js£. 


.4£l£ 


.H^ 


42 


Illustration  No.    66. 


jA. 


a. 


^1^ 


jLS.   ^f 


91.  Sales  Book  Postings.  Turn  to  the  first  invoice  of  merchandise  sold.  Write  the 
name  of  C.  A.  Gregg  together  with  his  address  in  the  Ledger.  (See  illustration  No.  67.) 
On  the  debit  side  of  the  Ledger  account,  in  the  Date  columns,  write  Sept.  3,  19 — .  (See 
illustration  No.  67.)  (This  is  the  date  of  the  transaction  as  it  appears  in  the  Sales  Book.) 
In  the  Folio  column  (see  illustration  No.  62)  in  the  Ledger  account,  write  the  number  of 
the  Sales  Book  page  from  which  the  item  is  taken.  (See  illustration  No.  67.)  Place 
the  amount  ($18.16)  in  the  Debit  money  column  of  the  Ledger  account.  (See  illustration 
No.  67.)  In  the  Folio  column  of  the  Sales  Book  place  the  number  of  the  Ledger  page 
on  which  you  have  put  C.  A.  Gregg's  account.     (See  illustration  No.  58.) 

Remember  that  all  Sales  Book  items  are  posted  to  their  respective  Ledger  accounts 
in  the  manner  indicated  in  this  paragraph. 

You  will  now  post  the  remaining  Sales  Book  items. 

Posting  of  Total  of  Sales  Book.  Find  the  total  of  the  Sales  Book.  (See  illustration 
No.  58.)  Post  the  amount  to  the  credit  side  of  Merchandise  account  in  the  Ledger.  (See 
illustration  No.  66.) 


Illustration   No.   67. 


JLJUi^ 


92.  Notes  Receivable  Book  Postings.  Turn  to  the  first  note  which  you  have  received. 
Write  the  name  of  Sam'l  B.  Wentz  in  the  Ledger.  (See  illustration  No.  68.)  On  the 
credit  side  of  the  Ledger  account,  in  the  Date  column,  write  Sept.  6,  19 — .  (See  illustration 
No.  68-)  (This  is  the  date  of  the  transaction  as  it  appears  in  the  Notes  Receivable  Book, 
in  the  Date  Received  column.)  In  the  Folio  column  (see  illustration  No.  62)  in  the  Ledger 
account,  write  the  number  of  the  Notes  Receivable  Book  page  from  which  the  item  is 
taken.  (See  illustration  No.  68.)  Place  the  amount  ($13.35)  in  the  Credit  money  column 
of  the  Ledger  account.  (See  illustration  No.  68.)  In  the  Folio  column  of  the  Notes  Re- 
ceivable Book  place  the  number  of  the  Ledger  page  on  which  you  have  put  Sam'l  B,  Wentz's 
account.     (See  illustration  No.  60.) 


Illustration  No.   68 


43 


Remember  that  all  Notes  Receivable  Book  items  are  posted  to  their  respective  Ledger 
accounts  in  the  manner  indicated  in  this  paragraph. 

You  will  now  post  the  remaining  Notes  Receivable  Book  items. 

Posting  of  Total  of  Notes  Receivable  Book.  Find  the  total  of  the  Amount  column  of 
the  Notes  Receivable  Book.  (See  illustration  No.  60.)  Post  the  amount  to  the  debit  side 
of  Notes  Receivable  account  in  the  Ledger.     (See  illustration  No.  69.) 


Illustration  No.   69. 


-^^4^    ^ 


(^ 


Z. 


93.  Notes  Payable  Book  Postings.  Turn  to  the  first  note  which  you  have  issued. 
Write  the  name  of  S.  D.  Cella  in  the  Ledger.  (See  illustration  No.  70.)  On  the  debit  side 
of  the  Ledger  account,  in  the  Date  column,  write  Sept.  3,  19 — .  (See  illustration  No.  70.) 
(This  is  the  date  of  the  transaction  as  it  appears  in  the  Notes  Payable  Book,  in  the  Date 
Given  column.)  In  the  Folio  column  (see  illustration  No.  62)  in  the  Ledger  account,  write 
the  number  of  the  Notes  Payable  Book  page  from  which  the  item  is  taken.  (See  illustra- 
tion No.  70.)  Place  the  amount  ($35.75)  in  the  Debit  money  column  of  the  Ledger  ac- 
count. (See  illustration  No.  70.)  In  the  Folio  column  of  the  Notes  Payable  Book  place  the 
number  of  the  Ledger  page  on  which  you  have  put  C.  D.  Cella's  account.  (See  illustra- 
tion No.  59.) 


Illustration  No.   70. 


.=^ 


^  y^^-^^-^€^z^^^^..*ii::>  /::Z^.A^£^ 


T 


-r:4^ 


Vf- 


^ 


JF 


X^ 


Remember  that  all  Notes  Payable  Book  items  are  posted  to  their  respective  Ledger 
accounts  in  the  manner  indicated  in  this  paragraph. 

You  will  now  post  the  remaning  Notes  Payable  Book  items. 

Posting  of  Total  of  Notes  Payable  Book.  Find  the  total  of  the  Amount  column  of  the 
Notes  Payable  Book.  (See  illustration  No.  59.)  Post  the  amount  to  the  credit  side  of 
Notes  Payable  account  in  the  Ledger.    (See  illustration  No.  71.) 


Illustration  No.   71. 


-fiL^^' 


J.    7^ 


94.     Cash  Book  Postings. 

Debit  or  Left  Side.  Turn  to  the  first  item  on  this  side.  (Your  name  invested  $5000.) 
Write  your  name  in  the  Ledger.  (See  illustration  No.  72.)  On  the  credit  side  of  the  Ledger 
account,  in  the  Date  columns,  write  Sept.  1,  19 — .  (See  illustration  No.  72.)  (This  is  the 
date  of  the  transaction  as  it  appears  in  the  Cash  Book.)     In  the  Folio  column  (see  illu- 


44 


stration  No.  62)  in  the  Ledger  account,  write  the  number  of  the  Cash  Book  page  from  which 
the  item  is  taken.  (See  illustration  No.  72.)  Place  the  amount  ($5000)  in  the  Credit 
money  column  of  the  Ledger  account.  (See  illustration  No.  72.)  In  the  Folio  column  of 
the  Cash  Book  place  the.number  of  the  Ledger  page  on  which  you  have  put  your  account. 
(See  illustration  No.  56.) 

Remember  that  all  items  appearing  oh  the  Debit  side  of  the  Cash  Book  are  posted  to 
their  respective  Ledger  accounts  in  the  manner  indicated  in  this  paragraph. 

Credit  or  Right  Side.  Turn  to  the  first  item  on  this  side.  Write  R.  U.  Wise's  name 
in  the  Ledger.  (See  illustration  No.  73-)  On  the  debit  side  of  the  Ledger  account,  in  the 
Date  columns,  write  Sept.  2,  19 — .  (See  illustration  No.  73.)  (This  is  the  date  of  the 
transaction  as  it  appears  in  the  Cash  Book.)  In  the  Folio  column  (see  illustration  No.  62) 
in  the  Ledger  account,  write  the  number  of  the  Cash  Book  page  from  which  the  item  is 
taken.  (See  illustration  No.  73.)  Place  the  amount  ($42.75)  in  the  Debit  money  column 
of  the  Ledger  account.  (See  illustration  No.  73.)  In  the  Folio  column  of  the  Cash  Book 
place  the  number  of  the  Ledger  page  on  which  you  have  put  R.  U.  Wise's  account.  (See 
illustration  No.  56.) 

Remember  that  all  items  appearing  on  the  Credit  side  of  the  Cash  Book  are  posted  to 
their  respective  Ledger  accounts  in  the  manner  indicated  in  this  paragraph. 

You  will  now  post  the  remaining  Cash  Book  items. 


Illustration  No.   72. 


^ 


s£^ 


Illustration  No.   73. 


^  ^  ^^  ;^^ 


J=. 


^ 


2=. 


.2^ 


"/^^^....^^..^^^^ift-^^  (   ^ 


95.  Trial  Balance.  Every  transaction  in  Double  Entry  bookkeeping  has  a  debit  and  a 
credit  which  must  be  equal.  Since  the  debit  and  credit  of  each  transaction  are  equal,  it 
must  follow  that  the  sum  of  the  debits  of  all  transactions  must  equal  the  sum  of  the  credits 
of  all  transactions.  As  all  debit  transactions  are  posted  to  the  debit  side  of  their  respective 
accounts  in  the  Ledger  and  all  credit  transactions  are  posted  to  the  credit  side  of  their  re- 
spective accounts  in  the  Ledger,  it  must  follow  that  the  sum  of  the  debit  sides  of  all  ac- 
counts in  the  Ledger  must  equal  the  sum  of  the  credit  sides  of  all  accounts  in  the  Ledger. 

Since  the  sum  of  the  debit  sides  of  all  accounts  equals  the  sum  of  the  credit  sides  of 
all  accounts,  it  must  follow  that  the  sum  of  the  differences  between  the  debit  and  credit 
side  of  each  account,  appearing  on  the  debit  side,  must  equal  the  sum  of  the  differences 
between  the  debit  and  credit  side  of  each  account  appearing  on  the  credit  side.  These 
differences  are  carried  from  their  respective  accounts  in  the  Ledger  to  the  Trial  Balance. 
If  an  account  shows  a  debit  difference,  it  is  placed  in  the  debit  column  of  the  Trial  Balance, 
if  a  credit  difference,  it  is  placed  in  the  credit  column. 

Since  the  debit  differences  of  all  accounts  in  the  Ledger  equals  the  credit  differences 
of  all  accounts  in  the  Ledger,  and  since  these  are  the  same  differences  which  are  transfer- 
red to  the  Trial  Balance,  it  must  follow  that  the  debit  and  credit  columns  of  the  Trial  Bal- 
ance must  be  equal. 


45 


Why  a  Trial  Balance  is  Taken.  A  Trial  Balance  is  taken  for  the  purpose  of  showing 
the  equality  of  debits  and  credits  as  posted  to  the  different  accounts  in  the  Ledger-  It 
also  serves  as  initial  data  for  the  Balance  Sheet. 

96.  How  to  Take  a  Trial  Balance.  Turn  to  your  Ledger.  Write  the  name  of  each 
account  that  has  one  side  greater  than  the  other.  (Debit  side  greater  than  the  credit,  or 
credit  side  greater  than  the  debit.)  Write  these  names  on  a  separate  Piece  of  Journal 
Paper. 

Noter^Do  not  put  down  the  name  of  any  account  whose  debit  and  credit  sides  are 
equal. 

For  an  example  we  will  take  the  Merchandise  Discount  account.  (See  illustration 
No.  74.)  Total  the  debit  and  credit  sides  of  this  account  in  small  pencil  figures,  then 
place  the  difference  on  the  larger  side,  also  in  small  pencil  figures.  (See  illustration  No. 
74.)  Transfer  this  amount  to  the  Trial  Balance  opposite  the  name  Merchandise  Discount 
and  in  the  credit  or  right-hand  money  column.      (See  illustration  No.  75.) 

Illustration  No.   74. 


^^^i^^^::-^"^;:^^^^^^:;^ 


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y 

r. 

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P- 

V^ 

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X      / 

You  will  now  find  the  differences  of  the  remaining  accounts  in  the  same  manner  and 
transfer  these  differences  to  their  proper  columns  in  the  Trial  Balance. 

Note: — If  your  Trial  Balance  has  been  correctly  taken,  it  will  correspond  with  illu- 
stration No.  75.     Rule  Trial  Balance  same  as  shown  in  illustration  No.  75, 


Illustration  No.   75. 


^^ 


TRIAL   BALANCE^,,,^^^^  ,^_ 


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Note: — Red  Ink  may  be  used  for  ail  rulings  If  desired. 


46 


Additional  Entries 

The  student  should  now  endeavor  to  make  the  following  entries,  referring  to  the  fore- 
going explanations  and  illustrations  as  little  as  possible. 

Note : — Use  the  same  books  for  the  following  entries  that  you  have  used  for  the  entries 
from  Sept.  1,  19—  to  Sept.  6,  19—. 

September  8,   19 — 

97.  You  buy  from  the  Maryland  Dairy  Co.,  Baltimore,  Md.,  the  following  merchan- 
dise :— 400  #   Butter  @  26i4c.     Terms   cash. 

98.  You  will  make  out  a  check  in  favor  of  Maryland  Dairy  Co.,  for  their  invoice  of 
this  date. 

99.  You  will  make  out  a  check  in  favor  of  A.  R.  Black,  for  his  invoice  of  Sept.  1,  19 — . 
Refer  to  the  Purchase  Book  for  the  terms. 

100.  You  will  make  out  a  check  in  favor  of  W.  Wright  and  Co.,  for  $58.00  to  apply 
on  their  invoice  of  Sept.  2,  19 — . 

Note: — As  you  were  to  be  allowed  2%  (%  means  per  cent.)  discount,  according  to  the 
terms  of  the  bill,  you  will  proceed  as  follows  in  order  to  ascertain  the  amount  for  which 
you  shall  receive  credit  and  the  amount  of  the  merchandise  discount. 

If  you  are  allowed  2%  discount,  the  amount  that  you  pay  represents  98%.  The  actual 
amount  that  you  pay  is  $58.00,  therefore  the  98%  equals  the  $58.00.  Since  you  are  to 
receive  credit  for  100%,  and  since  98%  represents  or  is  equal  to  $58.00,  the  actual  amount 
for  which  you  will  receive  credit  will  be  $58.00  divided  by  98%  or  $59.18.  Therefore  $59.18 
equals  100%.  Since  you  are  credited  with  $59.18  and  only  pay  $58.00,  the  difference  or 
$1.18  is  the  merchandise  discount. 

Entry: — In  the  Cash  Book,  on  the  right  hand  side,  debit  Wright  &  Co.  with  $59.18. 
On  the  left-hand  side  credit  Merchandise  Discount  with  $1.18. 

101.  You  will  make  out  a  check  in  favor  of  A.  J.  Lynn  for  $84.50  to  apply  on  their  in- 
voice of  Sept.  2,  19 — . 

Note: — Proceed  as  in  paragraph   100. 

102.  You  receive  from  James  Hecker  the  draft  whidh  you  sent  him  Sept.  6,  19 — ,  for 
his  acceptance.  Hecker  has  accepted  it.  Read  paragraph  35.  For  application  of  the  rule, 
see  paragraph  34.    For  entry  see  illustration  No.  31. 

September  9,  19 — 

103.  You  buy  from  S.  G.  Cella,— 7  tubs  C.  Butter  700  #  @  29^c;  5  crates  #  2  Eggs 
@  22%c ;  25  pairs  #  1  Squabs  @  45^c.    Terms  note  10  days. 

You  buy  from  Hoyk,  Bayrd  &  Co.,  Hanover,  Pa., — 75  crates  :^  1  Eggs  @  20c;  100 
crates  #  2  Eggs  @  17c ;  98  bu.  Old  Potatoes  @  72i4c.    Terms  2/10— net  30. 

104.  You  buy  from  R.  Hoe,  20  bu.  New  Potatoes  @  $1.09. 

Note: — As  you  will  pay  cash  for  this  bill  and  will  purchase  no  other  goods  from  Hoe, 
do  not  keep  an  account  with  him.  Read  paragraph  15.  For  a  similar  entry  see  illustration 
Nos.  3a  and  3b. 

September  10,  19 — . 

105.  You  discount,  today,  the  note  which  you  received  from  Samuel  B.  Wentz.  Add 
the  proceeds  ($13.30)  on  stub  of  Check  Book. 

Note: — Refer  to  the  Notes  Receivable  Book  for  the  data  concerning  this  note.  Read 
paragraph  27.     For  entries  see  illustrations  Nos.  19  and  20. 

106.  You  will  issue  a  check  for  freight  and  drayage  $10.25.  Make  out  this  check  to  the 
Long  Transfer  Co.     Read  note  under  paragraph  75. 

47 


107.  You  will  make  out  a  note  in  favor  of  S.  G.  Cella  for  his  invoice  of  Sept.  9,  19 — , 
Date  the  note  Sept.  9,  19 — ,  and  make  it  for  30  days.  If  necessary  read  paragraph  71  for 
entry. 

September  11,  19 — . 

108.  You  sell  to  R.  A.  Gates  and  Sons,  106  Maine  St.,  McSherrystown,  Pa. :—  25  # 
Lard  @  18c;  75  doz.  #  1  Eggs  @  25c;  25  bu.  Old  Potatoes  @  89c.    Terms  3/10. 

You  sell  to  H.  J.  Root,  21  Piatt  St.,  Baltimore,  Md. :— 97  #  Butter  @  28c ;  240  doz.  #  1 
Eggs  @  25c ;  60  doz.  #  2  Eggs  @  19c ;  20  bu.  Old  Potatoes  @  8814c.  Terms  3^  cash, 
j4  note  30  days. 

109.  You  receive  from  H.  J.  Root  his  note  to  cover  ^  of  the  merchandise  which  you 
sold  him  on  this  date.  The  note  is  dated  September  11,  19 — ,  and  is  issued  at  thirty  days. 
This  note  bears  interest  at  the  rate  of  6%.     If  necessary  read  paragraph  79  for  entry. 

110.  You  receive  from  H.  J.  Root,  a  check  in  payment  of  }4  of  the  merchandise  which 
you  sold  him  on  this  date.     (The  amount  of  the  check  is  $58.11.) 

111.  You  will  issue  a  check  in  favor  of  James  Klunk  for  $4.63.  This  check  is  in  pay- 
ment of  repairs  to  your  delivery  wagon. 

Note: — This  item  will  be  known  as  Expense. 

Remember  in  applying  the  rule,  to  say  that  Expense  is  the  result. 

Do  not  keep  an  account  with  James  Klunk.    (See  note  (b)  paragraph  75.) 

112.  You  sell  to  Adam  Gray,  2  bu.  Old  Potatoes  @  86c,  for  cash. 

Note: — As  Gray  pays  you  cash  for  this  bill  and  will  purchase  no  more  goods  from  you, 
do  not  keep  an  account  with  him.  Read  paragraph  18.  For  a  similar  entry  see  illustra- 
tion Nos.  7a  and  7b. 

September  12,  19 — . 

113.  You  have  this  day  purchased  from  A.  R,  Brooder  the  building  in  which  you  are 
doing  business,  together  with  the  lot,  for  $3000  to  be  paid  as  follows : — cash  $1500;  note  dated 
September  12,  19—  at  thirty  days  for  $1500. 

(a)  You  will  make  out  the  check  for  $1500  in  favor  of  A.  R.  Brooder. 

(b)  You  will  issue  the  note  for  $1500  in  favor  of  A.  R.  Brooder.  (Use  the  data  given 
above.) 

Note: — Do  not  keep  an  account  with  Brooder. 

Important.  In  applying  the  rule,  say  that  Real  Estate  is  the  result  in  both  113a  and 
113b. 

Remember  that  113a  requires  a  Cash  Book  entry  only,  and  that  113b  requires  a  Notes 
Payable  Book  entry  only. 

Indicate  in  the  Notes  Payable  Book  that  the  note  ($1500)  will  be  posted  to  the  debit 
of  Real  Estate  account,  at  the  time  of  posting,  instead  of  Brooder's  account  as  you  are  not 
keeping  an  account  with  him. 

Septernber  13,  19 — 

114.  Post  all  items  from  the  different  books  to  the  Ledger.  (This  includes  all  items 
from  Sept.  8,  19 —  to  Sept.  13,  19 — .)    If  necessary  read  paragraphs  on  Postings. 

115.  Deposit  all  cash  on  hand.  Read  paragraph  83.  Following  are  the  checks  which 
you  have  received:  H.  J.  Root,  $58.11 ;  Adam  Gray  $1.72. 

116.  Balance,  rule  and  prove  the  Cash    Book.    Read  paragraph  84. 

Note : — If  your  Cash  Book  is  correct,  it  will  show  a  Cash  Balance  of  $2760.85. 
Do  not  forget  to  add  the  Cash  Balance  of  Sept.  6,  19 —  in  with  the  debit  side  in  order 
to  obtain  the  Cash  Balance  of  Sept.  13,  19 — . 

117.  If  your  check  book  is  correct  it  will  contain  the  following: — Balance  Sept.  6,  19 — , 
$4514.84;  Proceeds  from  S.  B.  Wentz  note  $13.30;  Deposit  $59.83.  Checks  issued :— Mary- 
land Dairy  Co.,  $105.00;  A.  R.  Black,  $42.93;  W.  Wright  &  Co.,  $58.01 ;  A.  J.  Lynn,  $84.50; 
R.  Hoe,  $21.80;  Long  Transfer  Co.,  $10.25;    James  Klunk,  $4.63;  A.  R.  Brooder,  $1500. 

Note: — The  Check  Book  balance  will  be  the  same  as  the  Cash  Book  balance. 

48 


118.  If  the  Purchase  and  Sales  Books  are  correct,  they  will  show  the  following  totals: 
—Purchase,  $791.27;  Sales,  $161.71. 

Note: — There  will  be  no  entries  in  the  Journal  after  Sept.  6,  19 — . 
The  Notes  Payable  and  Notes  Receivable  Books  will  show  the  following  totals : — Notes 
Payable  $1731.46;  Notes  Receivable  $193.56. 

119.  You  will  now  take  a  Trial  Balance. 

Remember  that  each  trial  balance  takes  into  consideration  every  account  which  has 
one  of  its  sides  greater  than  the  other  (those  accounts  which  do  not  balance),  regardless  of 
the  fact  that  a  previous  trial  balance  has  been  taken.  In  this  case,  your  trial  balance  will 
cover  every  "open"  account  from  Sept.  1,  19 —  to  and  including  Sept.  13,  19 — .  If  necessary 
read  paragraph  96. 

120.  Balance  Sheet: — A  written  statement  setting  forth  the  losses,  gains,  resources, 
liabilities  and,  fmally,  the  present  worth  of  any  specified  business.  See  illustration  No. 
76. 

Note: — The  data  for  a  balance  sheet  consists  of  the  trial  balance  and  any  inventories. 


Illustration  No.   76. 


Balance   Sheet 


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Ledger  Account  Names 


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Resources 


Liabilities 


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49 


121.  Resource  Inventory: — A  notation  of  any  merchandise  and  other  property  on 
hand  which  has  not  been  sold  at  the  time  of  making  the  balance  sheet. 

Examples  of  resource  inventories  are: — Merchandise  on  hand  listed  at  its  cost  price; 
Real  Estate  listed  at  its  present  value;  any  property  on  hand,  besides  that  already  cited, 
listed  at  its  present  value. 

Resource  inventories  also  include  such  things  as  unexpired  insurance,  unpaid  rent  due 
the  business,  etc. 

122.  Liability  Inventory: — An  amount  owed  which  has  not  been  placed  on  the  books 
at  the  time  of  making  a  balance  sheet. 

Examples  of  liability  inventories  are : — Interest  accrued  on  notes  payable  or  outstand- 
ing accounts,  unpaid  freight,  rent,  salaries,   insurance,  etc.  owed  by  the  business. 

How  to  Make  Out  a  Balance  Sheet 

123.  Rule  a  sheet  of  blank  paper  similar  to  Illustration  No.  76.  Write  the  names  of  all 
accounts,  appearing  in  the  last  trial  balance,  on  the  balance  sheet.  Write  the  amounts 
which  represent  these  accounts  in  the  first  two  columns,  using  the  first  column  for  the  debits 
and  the  second  column  for  the  credits, 

124-  You  will  have  the  following  inventories : — Real  Estate,  $6300 ;  Horse  &  Wagon, 
$390;  Furniture  and  Fixtures,  $55.57;  Merchandise,  $1309.63. 

Note: — Unless  otherwise  mentioned,  all  inventories  given  will  be  resource  inventories. 

Place  these  inventories  to  their  respective  accounts  in  the  balance  sheet.  They  will 
be  written  to  the  left  of  the  first  column.    Use  red  ink.    See  illustration  No.  76. 

125.  Real  Estate,  Horse  and  Wagon,  Expense,  Furniture  and  Fixtures,  Freight,  In- 
terest, Discount,  Merchandise,  and  similar  accounts  will  show  a  loss  or  a  gain.  We  will 
call  all  accounts  which  show  a  loss  or  a  gain  Working  Accounts,  in  order  to  distinguish 
them  from  the  accounts  which  do  not  show  a  loss  or  a  gain. 

126.  How  to  find  the  Loss  or  Gain  when  a  Resource  Inventory  is  given.  Add  the  in- 
ventory to  the  credit  side  of  the  account.  If,  after  making  this  addition,  the  credit  side  is 
greater  than  the  debit,  the  difference  is  a  gain.  If  the  credit  side  is  smaller,  the  difference  is 
a  loss. 

127.  How  to  find  the  Loss  or  Gain  when  a  Liability  Inventory  is  given.  Add  the  in- 
ventory to  the  debit  side  of  the  account.  If,  after  making  this  addition,  the  credit  side 
is  greater  than  the  debit,  the  difference  is  a  gain.  If  the  credit  side  is  smaller,  the  differ- 
ence is  a  loss. 

128.  How  to  find  the  Loss  or  Gain  when  both  Resource  and  Liability  inventories  are 

given.     Add  the   resource  inventory  to  the  credit  side;  add  the  liability  inventory  to  the 

debit  side.     If,  after  making  these  additions,  the  credit  side  is  greater  than  the  debit,  the 
difference  is  a  gain.    If  the  credit  side  is  smaller,  the  difference  is  a  loss. 

129.  How  to  find  the  Loss  or  Gain  of  a  Working  Account  when  no  inventory  is  given. 
Add  the  credit  side  and  the  debit  side.  If  the  credit  side  is  greater,  the  difference  is  a  gain. 
If  the  credit  side  is  smaller,  the  difference  is  a  loss. 

130.  You  will  now  proceed  to  find  the  losses  or  gains  of  the  different  Working  Ac- 
counts that  appear  in  your  balance  sheet.     (See  illustration  No.  76.) 

Be  sure  to  work  out  each  one  of  the  losses  and  gains. 

131.  If  the  sum  of  the  Gain  column  is  greater  than  the  sum  of  the  Loss  column, 
the  difference  is  a  Net  Gain.    If  the  Loss  column  is  greater  the  difference  is  a  Net  Loss. 

132.  Accounts  which  do  not  come  under  the  heading  of  Working  Accounts  are  known 
as  Financial  Accounts. 

A  Financial  Account  which  does  not  balance  (have  its  debit  side  equal  to  its  credit 
side),  will  show  either  a  resource  or  a  liability. 

50 


133.     A  Resource : — Property  of  any  kind  on  'hand. 

Note: — The  names  of  the  accounts  generally  indicate  the  kinds  of  property. 
Examples: — Cash,  Notes  Receivable,  Personal   Accounts   due   the   business.     The   re- 
source inventories  from  any  accounts  are  also  classified  as  Resources. 


134.     A  Liability: — Debts  owed  by  the  business. 

Examples: — Personal  Accounts  owed  by  the  business  and  Notes  Payable, 
ity  inventories  from  any  account  are  also  classified  as  Liabilities. 


The  liabil- 


135.  When  the  debit  side  of  a  Financial  Account  is  larger  than  the  credit,  the  diff- 
erence is  a  Resource,  and  must  be  placed  in  the  Resource  column. 

136.  When  the  credit  side  of  a  Financial  Account  is  larger  than  the  debit,  the  differ- 
ence is  a  Liability,  and  must  be  placed  in  the  Liabilities  column. 

137.  You  will  now  extend  into  the  Resource  and  Liability  columns  the  different 
amounts  which  affect  them. 

Note: — Be  careful  to  place  the  amounts  directly  opposite  the  accounts  which  they  affect. 

138.  The  proprietor's  account  is  a  Financial  Account,  and  since  the  credit  side  is  al- 
ways greater  than  the  debit,  it  will  show  a  Liability.  The  balance  from  the  proprietor's 
account  is  never  extended  into  the  Liability  column  until  the  Net  Gain  or  Net  Loss  has 
been  ascertained.  After  this  net  gain  is  added  to  or  the  net  loss  subtracted  from  the  pro- 
prietor's account,  it  is  placed  in  the  Liability  column,  and  represents  the  Present  Worth  of 
the  business. 

After  the  Present  Worth  has  been  placed  in  the  Liability  column,  the  sum  total  of  this 
column  must  equal  the  sum  total  of  the  Resource  column. 

Be  sure  that  your  Balance  Sheet  corresponds  in  figures  and  rulings  to  the  Balance 
Sheet  shown  in  illustration  No.  76  as  this  is  taken  from  your  book  Sept.  13,  19 — . 


Closing  Accounts  in  the  Ledger 

139.     How  to  close  Accounts  showing  a  Loss  or  a  Gain  and  not  having  an  Inventory. 

Find  the  difference  between  the  two  sides  and  place  it  on  the  smaller  side  in  red  ink.-  If 
the  debit  side  is  smaller,  place  the  difference  on  this  side  together  with  the  word  Gain. 
See  illustration  No.  77a.  If  the  credit  side  is  smaller,  place  the  difference  on  this  side  to- 
gether with  the  word  Loss.  See  illustration  No.  77b.  Rule  the  account  in  red  ink  and 
bring  down  the  totals  of  t!he  debit  and  credit  sides.  These  totals  will  be  equal.  See  illu- 
strations Nos.  77a  and  77b. 


Illustration  No.  77a. 


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51 


Illustration 
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Gain  account  which  you  will  create  in  the  Ledger.  See  illustration  No.  77c.  If  the  dif- 
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Illustration   No.    77c. 


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140.     How  to  close  Accounts  showing  a  Loss  or  Gain  and  having  an  Inventory.       If 

the  inventory  is  a  Resource  Inventory,  place  it  on  the  credit  side  in  red  ink.  Find  the  dif- 
ference between  the  two  sides  and  place  it  on  the  smaller  side  in  red  ink.  If  the  debit 
side  is  smaller,  place  the  difference  on  this  side  together  with  the  word  Gain.  See  illustra- 
tion No.  78a.  If  the  credit  side  is  smaller,  place  the  difference  on  this  side  together  with  the 
word  Loss.  See  illustration  No.  78b.  Rule  the  account  in  red  ink  and  bring  down  the  totals 
of  the  debit  and  credit  sides.  These  totals  will  be  equal.  See  illustrations  Nos.  78a  and  78b. 
Important.  Bring  the  Inventory  below  the  rulings  on  the  opposite  side  from  that  on 
which  it  already  appears.     See  illustrations  Nos.  78a  and  78b. 


Illustration   No.    78a. 


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52 


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If  the  difference  in  the  account  is  a  Loss,  carry  this  amount  in  black  ink  to  the  debit 
side  of  Loss  and  Gain  account.  See  illustration  No.  77c.  If  the  difference  is  a  Gain,  it 
sfhould  be  carried  to  the  credit  side  of  Loss  and  Gain  account. 


141.     How  to  close  a  Financial  account  which  has  one  side  larger    than    the    other. 

Find  the  difference  between  the  two  sides,  and  place  it  on  the  smaller  side,  in  red  ink, 
together  with  the  word  Balance.  See  illustration  No.  79.  Rule  the  account  in  red  ink  and 
bring  down  the  totals  of  the  debit  and  credit  sides.  These  totals  will  be  equal.  See  illu- 
stration No.  79. 

Important.    Bring  the  Balance  below  the  rulings   on  the   opposite  side  from  that  on 
which  it  already  appears.     See   illustration  No.  79. 


Illustration  No.   79. 


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142.  How  to  close  the  Loss  and  Gain  account.  Find  the  difference  between  the  two 
sides  and  place  it  on  the  smaller  side  in  red  ink.  If  the  debit  side  is  smaller,  place  the  dif- 
ference on  this  side  together  with  the  words  Net  Gain.  See  illustration  No.  80a.  If  the 
credit  side  is  smaller,  place  the  difference  on  this  side  together  with  the  words  Net  Loss. 
See  illustration  No.  80b.  Rule  the  account  in  red  ink  and  bring  down  the  totals  of  the  debit 
and  credit  sides.    These  totals  will  be  equal.     (See  illustrations  Nos.  80a  and  80b.) 


53 


Illustration  No.  80a. 


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143.  How  to  close  the  Proprietor's  (your  name)  Account.  If  the  Loss  and  Gain  ac- 
count shows  a  Net  Gain,  carry  this  amount  from  the  Loss  and  Gain  account  into  the  Pro- 
prietor's (your  name)  account  and  place  it  on  the  credit  side.  See  illustration  No.  81a. 
Find  the  difference  between  the  two  sides,  and  place  it  on  the  smaller  side  in  red  ink.  If 
the  debit  side  is  smaller,  place  the  difference  on  this  side  together  with  the  words  Present 
Capital.     See  illustration  No.  81a. 


Illustration   No.   81a. 


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54 


Note: — Should  the  credit  side  ever  be  smaller,  place  the  difference  on  this  side  to- 
gether with  the  words  Net  Insolvency. 

If  the  Loss  and  Gain  account  shows  a  Net  Loss,  carry  this  amount  from  the  Loss  and 
Gain  account  into  the  Proprietor's  (your  name)  account  and  place  it  on  the  debit  side.  See 
illustration  No.  81b. 


Illustration  No.  81b. 


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Find  the  difference  between  the  two  sides,  and  place  it  on  the  smaller  side  in  red  ink. 
If  the  debit  side  is  smaller,  place  the  difference  on  this  side  together  with  the  words  Present 
Capital.     See  illustration  No.  81b.     Read  the  Note  in  this  paragraph. 

Rule  the  account  in  red  ink  and  bring  down  the  totals  of  the  debit  and  credit  sides. 
These  totals  will  be  equal.     See  illustration  Nos.  81a  and  81b. 


144.     How  to  rule  accounts  having  single  amounts   on   each   side  that  are  similar  and 
on  the  same  line.     See  illustration  No.  82. 


Illustration  No.   82. 


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145.     How  to  rule  accounts  having  a  number  of  amounts  on  one  or  both  of  its  sides. 
See  illustration  No.  83. 

Be  sure  that  you  have  closed  every  account  in  the  Ledger. 


Illustration  No.  83. 


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Additional  Entries 

September  16,   19 — 

146.  You  buy  from  Philip  B.  Miller  &  Co.,  Littlestown,  Pa.,  the  following  merchan- 
dise:—7  tubs  C.  Butter,  700  #  @  29>4c;  5  crates  #  2  Eggs,  12  doz.  @  223^c;  25  pairs  # 
1  Squabs  @  45l^c.     Terms  1/10 — note  30. 

You  buy  from  Wm.  T.  Hummer,  Harney,  Pa.,  the  following  merchandise : — 75  crates 
#  1  Eggs,  12  doz.  @  20c;  100  crates  #  2  Eggs,  12  doz.  @  17c;  98  bu.  Old  Potatoes  @ 
72^c.    Terms  note  30  days. 

September  17,  19 — . 

147.  You  sell  to  C.  A.  Gregg,  240  Market  St.,  York,  Pa. :— 8  doz.  #  1  Eggs  @  25c ; 
12  doz.  #  2  Eggs  @  18c ;  50  #  C.  Butter  @  28c.     Terms  2/10— net  30. 

You  sell  to  Mann  &  Mann,  Cly,  Pa. :— 14  crates  #  2  Eggs  @  18c.    Terms  2/10— net  30. 

September  18,  19 — . 

148-  You  buy  from  W.  Wright  &  Co.,  Hanover,  Pa.,  the  following  merchandise: — ■ 
900  #  Lard  @  9  2/3c.    Terms  cash. 

You  buy  from  R.  U.  Wise,  16  A  Street,  N.  E.,  Washington,  D.  C,  the  following  mer- 
dhandise: — 176  bu.  Old  Potatoes  @  71c;  46  bu.  New  Potatoes  @  1.07;  72  pairs  #  1  Squabs 
@  44c ;  100  pairs  #  2  Squabs  @  33i4c.   Terms  net  30. 

149.  You  will  discount,  today,  the  note  received  Sept.  11,  19 — ,  from  H.  J.  Root. 
(See  paragraph  109  for  data.    Be  sure  to  read  paragraph  29. 

September  19,  19—. 

150.  You  will  make  out  a  note  in  favor  of  Wm.  T.  Hummer  for  his  invoice  of  Sept. 
16,  19 — .     Date  the  note  Sept.   16,   19 — ,  and  make  it  for  30  days. 

151.  You  sell  to  H.  J.  Root,  21  Piatt  St.,  Baltimore,  Md. :— 96  pairs  #  1  Squabs  @  64c; 
55  pairs  #  2  Squabs  @  49c.     Terms  2/10 — net  30. 

You  sell  to  H.  J.  Root,  21  Piatt  St.,  Baltimore,  Md. :— 25  #  Lard  @  18c;  75  doz.  #  1 
Eggs  @  25c;  25  bu.  Old  Potatoes  @  89c.    Terms  draft  at  30  days  sight. 

September  22,  19 — 

152.  You  sell  to  O.  T.  House,  120  Philadelphia  St.,  New  Oxford,  Pa.,  2  boxes  Oranges 
@  $3.1014.     Terms  2/10— net  30. 

You  sell  to  O.  A.  Messenger,  32  Filbert  St.,  Washington,  D.  C,  16  crates  #  1  Eggs  @ 
25c.    Terms  sight  draft. 

You  sell  to  W.  Wright  &  Co.,  Hanover,    Pa.,  30  Grape  Fruits  @  13  2/3c.    Terms  cash. 

153.  You  discount,  today,  the  note  which  you  issued,  in  favor  of  S.  G.  Cella.  The 
amount  of  this  note  is  $35.75.  See  paragraph  71  for  other  data.  Be  sure  to  read  paragraph 
26. 

September  23,  19 — . 

154.  You  buy  from  A.  C.  Lutz,  Melrose,  Md.,  2375  #  Lard  @  9  2/5c.  Terms  sight 
draft. 

You  buy  from  S.  B.  Tenner,  48  High  St.,  Columbia,  Pa.,  3  tubs  R.  Lard,  500  #  @  10c. 
Terms  draft  at  30  days  after  date. 

155.  You  receive  from  Mann  &  Mann  a  check  in  payment  of  the  merchandise  sold  them 
September  17,  19 — .     Do  not  forget  to  deduct  the  Merchandise  Discount. 

You  receive  from  C.  A.  Gregg  a  check  in  payment  of  the  Merchandise  sold  him  Sep- 
tember 17,  19 — .    Do  not  forget  to  deduct  the  Merchandise  Discount. 

56 


156.  You  will  draw  a  sight  draft  on  O.  A.  Messenger  for  the  merchandise  sold  him  Sep- 
tember 22,  19 — .    For  form  of  sight  draft  see  illustration  No.  27a. 

Note: — In  actual  business  this  draft  must  be  presented  to  O.  A.  Messenger. 
No  entry  will  be  made  for  this  draft  until  O.  A.  Messenger  pays  it. 

September  24,  19—. 

157.  You  sell  to  James  Hecker,  382  Market  St.,  Lancaster,  Pa. : — 50  bu.  Old  Potatoes 
@  90c;  10  bu.  New  Potatoes  @  $1.15.    Terms  note. 

You  sell  to  R.  A.  Gates  &  Sons,  106  Maine  St.,  McSherrystown,  Pa. :— 900  #  Lard  @ 
1834c;  20  bunches  Bananas  @  71>4c.    Terms  3/10—2/30. 

158.  You  receive  from  W.  Wright  &  Co.,  a  check  in  payment  of  the  merchandise  sold 
them  September  22,  19 — . 

September  25,  19 — . 

159.  You  have  been  notified  by  your  bank  that  A.  C.  Lutz  has  drawn  a  sight  draft  on 
you  for  $223.25.  This  draft  was  drawn  in  payment  of  the  merchandise  which  you  bought 
from  Lutz  September  23,  19 — .  You  will  now  issue  a  check  in  favor  of  your  bank  (Student's 
Bank),  in  payment  of  this  draft.  As  the  bank  is  acting  as  your  agent,  they  will  pay  this 
amount  to  Lutz  for  you.    Be  sure  to  read  paragraph  37.     For  entry  see  illustration  No.  33. 

September  26,  19 — 

160.  You  buy  from  J.  H.  Love  &  Co.,  Meriden,  Pa.,  the  following  inercliandise : — 84 
bunches  Bananas  @  $1.39>4  ;  946  pairs  #  1  Squabs  @  43%c;  235  pairs  #  2  Squabs  @  34c; 
100  bu.  New  Potatoes  @  $1.08.     Terms  2/10— note  30. 

161.  You  receive  from  James  Hecker,  a  note,  for  the  merchandise  sold  him  Septem- 
ber 24,  19 — .  This  note  is  dated  September  24,  19 — ,  and  is  given  for  30  days.  The  amount 
is  $56.50.     Be  sure  to  read  paragraph  79. 

162.  You  will  make  out  a  check  in  favor  of  the  Hanover  Fire  Insurance  Co.,  for  $25.00. 
]NJote:-^You  have  had  your  merchandise  insured  and  the  $25.00  is  given  in  payment  of 

the  premium. 

Statement: — Cash  performs  the  service  in  that  it  brings  into  your  business  Insurance, 
therefore  Insurance  is  the  result.  You  will  apply  the  rule  to  this  statement  in  order  to 
ascertain  your  entry. 

Remember  to  keep  an  account  for  Insurance. 

September  27,  19 — . 
163-     You  receive  the  money  on  the  Hecker  draft  which  is  due  today.     The  amount 
of  this  draft  is  $135.46.     Read  paragraph  23. 

164.  Your  bank  collected  the  amount  of  the  Hecker  draft  for  you,  and  for  doing  so 
has  charged  you  25c. 

Note: — The  collecting  of  the  money  on  notes,  drafts,  etc.,  is  known  as  Collection  and 
Exchange. 

Statement: — Cash  performs  the  service  in  that  it  secures  for  me  Collection  and  Ex- 
change, therefore  Collection  and  Exchange  is  the  result.  You  will  apply  the  rule  to  this 
statement  in  order  to  ascertain  your  entry. 

September  29,  19 — 
165-     You  sell  to  Mann  &  Mann,  Cly,  Pa. :— 160  #  C.  Butter  @  29c;  312  doz.  #  1  Eggs 
@  25c ;  22  doz.  #  2  Eggs  @  19c.    Terms  draft  30  days  after  date. 

166.     S.  B.  Tenner  has  drawn  a  draft  on  you  which  you  have  accepted  today. 

The  draft  is  dated  September  29,  19 — ,  and  is  given  for  thirty  days  after  date.  It  is 
payable  to  the  order  of  S.  B.  Tenner  and  is  issued  for  $150.00.  You  will  make  the  entry 
for  this  draft. 

Note: — After  you  accept  the  draft,  it  becomes  a  Note  Payable  to  you. 

57 


Statement: — Note  Payable  performs  a  service  for  you  in  that  it  liquidates  your  in- 
debtedness to  S.  B.  Tenner,  therefore  the  liquidation  of  S.  B.  Tenner's  account  is  the 
result.     Read  paragraph  71  for  application  of  rule  and  apply  it  to  this  statement. 

167'     You  will  now  deposit  all  cash  on  hand.        Following  are  the  checks  which  you 
have  received :— Mann  and  Mann,  $29.64;  C.  A.  Gregg,  $17.80;  W.  Wright  &  Co.,  $4.10. 
Note: — Before  making  this  deposit  be  sure  to  read  paragraph  83. 

168.  You  will  now  balance,  rule  and  prove  the  Cash  Book.     Read  paragraph  84. 
If  your  cash  book  is  correct,  it  will  show  a  balance  of  $2721.84. 

169.  If  your  check  book  is  correct  it  will  contain  the  following: — Balance  Sept.  13, 
19 — ,  $2760.85;  Proceeds  from  H.  J.  Root  note,  $58.17;  Proceeds  from  James  Hecker  draft, 
$135.21;  Deposit  $51.54.  Checks  issued: — A.  C.  Lutz,  $223.25;  Hanover  Fire  Insurance  Co.. 
$25.00;  Proceeds  of  note  issued  to  S.  G.  Cella,  deducted,  $35.68. 

Note: — The  Check  Book  balance  will  be  the  same  as  the  Cash  Book  balance. 

170.  These  are  the  correct  balances  for  the  following  books: — Purchase,  $2625.19; 
Sales,  $686.02;  Notes  Payable,  $604.81;  Notes  Receivable,  $56.50. 

Note: — Be  sure  to   rule  the  different  books  mentioned  in  this  paragraph. 

171.  Post  all  items  from  the  different  books  into  the  Ledger.  (This  includes  all 
items  from  Sept.  13,  19—  to  Sept.  30,  19—.) 

Be  sure  to  post  all  totals. 

172.  You  will  now  take  a  Trial  Balance,  and  make  out  a  Balance  Sheet. 

The  inventories  for  the  Balance  Sheet  are  as  follows:  Real  Estate,  $6615.00;  Horse  and 
Wagon,  $385.00;  Furniture  and  Fixtures,  $54.00;  Merchandise,  $3436.05;  Insurance  $24.00. 

Note : — If  your  Balance  Sheet  is  correct,  it  will  show  the  following  results :  Total  of 
Loss  column,  $8.78 ;  Total  of  Gain  column,  $502.39 ;  Net  Gain  $493.61 ;  Total  of  Resource 
column,  $13914.91.;  Total  of  Liability  column,  before  Present  Worth  is  added,  $4752.56; 
Present  Worth,  $9162.35. 

173.  You  will  now  close  all  accounts  in  the  Ledger. 


In  General 

174.  The  rule  for  determining  whether  an  item  shall  be  debited  or  credited,  together 
with  the  instructions,  etc.,  set  forth  in  this  work,  are  applicable  to  every  different  kind  of 
transaction.  It  is  therefore  possible  to  take  the  transactions  from  any  other  work  and,  by  ap- 
plying the  methods  used  in  Simplified  Bookkeeping,  construct  a  set  of  books  correctly. 


58 


INDEX 


Page 

Accounts,  Definition  3 

Classified  3 

Closing  of 51-54 

Illustrations    51-54 

Financial   50 

Rulings   of 55 

Illustrations  55 

Working  50 

B 

Balance  Sheet,  Definition 49 

Explanation   50,    51 

Illustration  49 

Bank   Pass   Book,   Illustration 32 

Bookkeeping,  Definition 3 

Object 3 

Classified  3 

Business   Transactions,   Definition 3 

Classified   3 

c 

Cash  Balance,  Proof  of 37 

Cash  Book  26,  27 

Exercises  27,  28 

Illustration  27 

Postings    44 

Illustrations 45 

Check,  Illustration  24 

Check   Book   Stub   , 33 

Creditor,  A 3 

Credit,  A 3 

D 

Debit,  A  3 

Debtor,  A  3 

Deposit  Slip,  Illustration  36 

Discount,    Definition     from     Payer's 

viewpoint  10 

Definition  from  Receiver's  viewpoint....!  1 

Drafts,  Definition  14 

Acceptance  15,   16 

Classified  14,  15 

Exercises  31,  32 

Illustrations   14-16 

Negotiable    24 

Payment  and  Collection 20 

E 

Endorsement,   Definition  24 

Classified  24,  25 

Illustrations  ; 25 

I 
Interest,     Definition     from     Payer's 

viewpoint   12 

Definition  from  Receiver's  view- 
point  .....13 

J 

Journal    31 

Illustrations  4,  16,  18,  21,  22 

Postings  41,  42 

Illustrations  42 


Page 

Ledger,    Definition    41 

Illustration  41 

Liability,  A 51 

Liability  Inventory  50 

M 

Maturity  20 

Merchandise  Discount,   Definition 9 

N 

Note,  Definition  5 

Classified  5 

Illustrations  5,  12 

Negotiable   24 

Notes   Payable   Book   31 

Illustrations  6,  17 

Postings    44 

Illustrations  44 

Notes  Receivable  Book  31 

Illustrations  7,  8,  17,  18 

Postings  43 

Illustrations  43,  44 

P 

Posting,  Definition  41 

Cash    Book    44 

Illustrations  45 

Journal  41,  42 

Illustrations  42 

Notes  Payable  Book  44 

Illustrations  44 

Notes  Receivable  Book 43 

Illustrations  43,  44 

Purchase  Book  42 

Illustrations  42,  43 

Sales  Book  43 

Illustrations  43 

Purchase  Book  28 

Exercises 29 

Illustration    29 

Postings    42 

Illustrations  42,  43 

R 

Resource,   A    51 

Resource  Inventory  50 

Rule  for  Debiting  and  Crediting 3 

s 

Sales  Book 29 

Exercises 31 

Illustration  30 

Postings    43 

Illustrations  43 

T 

Trial  Balance  ...45,  46 

Illustrations  46 

W 

Work  for  the  Student  32-58 


INDEX  OF  ILLUSTRATIVE  TRANSACTIONS 


Page 

Merchandise  bought  on   account 4 

Merchandise  bought  for  spot  cash 4 

Merchandise  bought  for  a  note  5 

Merchandise  sold  on  account 6 

Merchandise  sold   for   spot   cash 6 

Merchandise  sold  for  a  note 7 

I  pay  outstanding  debt  in  cas'h 8 

I  pay  outstanding  debt  by  note 8 

Outstanding  debt  paid  in  cash  to  me....  8 

I  collect  money  on  note 9 

I  pay  outstanding  debt  in  cash,  dis- 
count allowed 9 

Outstanding  debt  paid  in  cash  to  me, 

discount   allowed   10 

I  discount  my  note 10 

I  discount  note  received  by  me 11 

I  discount  my  interest  bearing  note... .12 
I   discount  interest  bearing  note 

received  by  me  13 

Stamps  bought  for  cash 13 

Cash  paid  for  rent 14 

Drafts. 

I  draw  a  time  draft  on  Samuel  Marks 
in  favor  of  Wm.  Mason.  Samuel 
Marks  accepts  the  draft 16 

H.  B.  Wright  draws  a  time  draft  on 
Me  in  favor  of  John  Wood.  I  ac- 
cept the  draft  .• 16 

Wm.  Oliver  draws  a  time  draft  on 
John  Perry  in  favor  of  Me.  John 
Perry  accepts  the  draft  ' 17 

I  draw  a  time  draft  on  Jacob  Klein 
in  favor  of  Myself.  Klein  accepts 
the  draft  18 

I  draw  a  sight  draft  on  Oliver  Myers 
in  favor  of  Edw.  Martin  18 


Page 

Howard  Ort  draws  a  sight  draft  on 
Me  in  favor  of  Wm.  Wentz.  The 
draft  is  presented  to  Me  for  pay- 
ment   18 

Edward  Park  draws  a  sight  draft  on 
Morris  Town  in  favor  of  Me.  The 
draft  is  presented  by  Me  for  pay- 
ment    19 

I  draw  a  sight  draft  on  E.  R.  Burr  in 
favor  of  Myself.  The  draft  is  pre- 
sented by  Me  for  payment 19 

Payment  and  Collection  of  Time  Drafts. 

I  pay  a  time  draft,  which  was  drawn 
on  Me  by  Wm.  Simpson  in  favor  of 
Samuel  Keller 20 

I  discount  a  time  draft,  which  was 
drawn  on  Me  by  John  Hoe  in  fav- 
or of  Wm.  Johnson  20 

I  collect  the  money  for  a  time  draft, 
which  was  drawn  by  Carl  Short  on 
Clyde  Hoke  in  favor  of  Me 20 

I  discount  a  time  draft,  which  was 
drawn  by  H.  B.  Scott  on  E.  C. 
Eckles  in  favor  of  Me  20 

Merchandise  Returned. 

I  return  merchandise  bought  on 
account  20 

Merchandise  sold  on  account  return- 
ed to  me 21 

Personal  Account  Kept. 

Merchandise  bought  for  cash  22 

Merchandise  sold  for  cash  23 

Payment  by  Notes  Received  from  other 
Parties. 

Merchandise  bought  for  a  note  25 

Merchandise  sold  for  a  note 26 


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